The Reserve Bank of India ("RBI"), with a view to simplify procedures and providing enhanced flexibility in respect of foreign exchange transactions, had liberalized the remittance scheme by enhancing the then existent remittance limit of USD 25,000. Accordingly, on 20th December 2006, the remittance scheme was liberalized, pursuant to which an individual resident in India was permitted to remit upto USD 50,000 per financial year for any current or capital account transaction or combination of both. The cap of USD 50,000 would include remittances made by resident individuals by way of gifts and donations.
In accordance with the Annual Policy Statement for the year 2007-08, the RBI has on 8th May 2007, announced further liberalization of the remittance scheme in respect of resident individuals whereby the existing remittance limit of USD 50,000 per financial year has now been enhanced to USD 100,000 per financial year (April – March).
Such remittances are allowed only in relation to permissible current or capital account transactions or a combination of both. Transactions not permissible under the prevalent foreign exchange law and regulations in India and remittances for margins or margin calls to overseas exchanges/overseas counter parties are not permitted under the liberalized remittance scheme.
Further, banks would not be allowed to extend credit facilities to resident individuals for facilitating remittance under the liberalized remittance scheme.
Investment by resident individuals in overseas companies earlier included under the rationalized remittance scheme and the 10% reciprocal shareholding requirement in listed Indian companies by such overseas companies which has been dispensed with by the RBI would remain unchanged.
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