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How to send money abroad

Here's what you should know about the Reserve Bank of India's Liberalised Remittance Scheme.

Sushmita Choudhury | Print Edition: April 16, 2009

Here's what you should know about the Reserve Bank of India's Liberalised Remittance Scheme.

What is the Liberalised Remittance Scheme (LRS) and who can avail of it?

The scheme allows one to not only conduct current or capital account transactions but also acquire and hold immovable property and assets outside India without prior RBI approval. One can also open, maintain and hold foreign currency accounts with banks outside the country. One can remit up to $2,00,000 in a financial year. The facility is available to all resident individuals, including minors, as long as one has a PAN card.

What are the main transactions permitted under the scheme?

The LRS permits remittances for the following purposes:

  1. To make donations and cash gifts.
  2. To invest in units of mutual funds, venture funds, unrated debt securities, promissory notes, bonds and stocks, including those listed on foreign stock exchanges. However, one can't make remittances for margins or margin calls to overseas exchanges.
  3. To purchase objects of art, subject to applicable laws like the extant foreign trade policy.
  4. For overseas education and travel.
  5. To acquire ESOPs.
  6. To invest in the overseas real estate market.

Are these in addition to FEMAapproved transactions?

Yes, the provisions under the scheme are besides those permitted in Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, and its subsequent amendments. For instance, business travellers are allowed to carry forex in any currency up to $25,000 per trip, while those going abroad to study or to take up employment can carry up to $1,00,000. If you fall in any of these categories, you can not only carry the permitted amount but also combine it with LRS to remit an additional $2,00,000. For details on the provisions under Schedule III, visit www.infodriveindia.com/Exim/RESERVE-BANK/FEMA.aspx.

Can I send money to any country under the scheme?

The scheme does not cover remittances to Bhutan, Nepal, Mauritius, Pakistan or the nations identified by the Financial Action Task Force as ‘non-cooperative'. However, the Indo-Nepal Remittance Scheme, launched last year, allows one to transfer funds up to Rs 50,000 from any of the NEFT (national electronic fund transfer service) branches to Nepal up to 12 times in a year.

What are the applicable charges?

You can either remit money through a wire transfer or as a demand draft. The charges vary between Rs 350 and Rs 1,200 for every wire transfer, plus the foreign currency conversion charge, typically Rs 25. In the case of demand drafts, the charges vary from Rs 250 to Rs 1,000, depending on the bank and your currency of choice.

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