RBI Rules for Sending Money from India to Foreign Countries: Key Guidelines & Latest Updates

Indian residents looking to send money abroad must adhere to the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS). With just a few days remaining in this financial year, individuals still have the opportunity to maximize their remittance limit under the LRS before March 31, 2025.

What is RBI’s Liberalised Remittance Scheme (LRS)?

The LRS allows every resident Indian, including minors (with a guardian’s countersignature), to remit up to USD 2,50,000 (2.5 lakh dollars) per fiscal year for various permissible purposes. At an exchange rate of INR 86 per dollar, this translates to approximately INR 2.15 crore.

Maximizing Your Remittance Limit

By making a full remittance of 2.5 lakh dollars before March 31, 2025, and initiating another transaction at the start of the next fiscal year, an individual can transfer up to USD 5,00,000 (5 lakh dollars) in just a few days.

Permissible Transactions Under LRS

Foreign exchange remitted under LRS can be utilized for:

• Current account transactions (e.g., foreign travel, education, medical expenses, and gifts/donations)

• Capital account transactions (e.g., investment in overseas stocks, real estate purchases, and setting up businesses abroad)

• A combination of both

Growth in Overseas Investments Under LRS

A significant portion of outward remittances from India is flowing into financial assets abroad. Data from October 2024 highlighted a 78% year-on-year increase in investments made in overseas equity and debt under the LRS framework.

Investing in US Stocks from India

Indian investors seeking portfolio diversification can buy US stocks through international brokerage platforms. The process involves:

1. Opening an international trading account in India.

2. Converting INR to USD through authorized dealers.

3. Transferring funds to a foreign bank account linked to the brokerage platform.

4. Purchasing shares of global companies listed on US stock exchanges.

New RBI Rules for Unused Foreign Exchange

If you have made remittances under the LRS, it is crucial to comply with the latest RBI directive regarding unspent foreign exchange.

According to the new RBI rule:

“With effect from 24 August 2022, the foreign exchange realised/ unspent/ unused and not reinvested, is to be repatriated and surrendered to an authorised person within 180 days from the date of such receipt/ realisation/ purchase/ acquisition or date of return to India.”

This means that any foreign currency lying unused must be returned within the stipulated timeframe to avoid regulatory penalties.

The RBI’s LRS provides Indian residents with significant flexibility for international remittances. However, individuals must be mindful of regulatory updates, especially regarding repatriation of unused funds. If you are planning to remit money abroad, ensure all transactions are completed before March 31, 2025, to make the most of this fiscal year’s remittance limit.

Conclusion

The RBI’s Liberalised Remittance Scheme (LRS) offers Indian residents a structured and regulated way to send money abroad for various purposes, including education, investment, and property purchases. 

With a limit of $250,000 per financial year, individuals can leverage this scheme to diversify their assets and explore global financial opportunities. However, compliance with RBI regulations is crucial, including adhering to the new repatriation rule, which mandates returning unused foreign exchange within 180 days.

As international investments and foreign education gain traction, understanding LRS rules can help individuals optimize remittances, avoid penalties, and make informed financial decisions. With rising interest in overseas equity and debt investments, staying updated on regulatory changes and currency exchange trends is essential. As the March 31 deadline approaches, individuals looking to maximize their remittance limits should act promptly to make the most of the current financial year.