Liberalised Remittance Scheme (LRS)

Category: Indian Economy / Banking and Foreign Exchange

UPSC Notes

The Liberalised Remittance Scheme is a Reserve Bank of India framework that allows resident individuals to remit money abroad for permitted current-account and capital-account transactions, subject to applicable conditions.

It was introduced in 2004.

Permitted purposes may include

  • Overseas education and medical treatment.

  • Travel expenses.

  • Gifts and donations.

  • Certain overseas investments and deposits.

  • Other permitted transactions under foreign-exchange regulations.

The general limit is USD 250,000 per resident individual per financial year, subject to the scheme's rules and applicable restrictions.

Key Pointers for UPSC

  • Regulator: Reserve Bank of India.

  • Introduced: 2004.

  • General annual limit: USD 250,000 per resident individual.

  • The scheme applies to resident individuals, not companies as such.

  • Permitted remittances remain subject to the Foreign Exchange Management Act (FEMA), RBI directions and other applicable laws.

  • The LRS is different from foreign direct investment into India.