Reserve Bank of India allows resident Indians to open foreign currency accounts in GIFT City

The central bank on Wednesday (July 10) decided to allow authorised persons to facilitate remittances for availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs, according to reports.

The RBI has also permitted all current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an Foreign Currency Account (FCA) held in IFSCs, reports said.

The country's apex bank said in a statement that for these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.

Presently, remittances under LRS to IFSCs can be made only for making investments in IFSCs in securities except those issued by entities/ companies resident in India (outside IFSC) and payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing certain courses, as reported by Mint.

The RBI's latest move will allow resident Indians to open a fixed deposit in foreign currency like dollars in a bank account in GIFT City.

This is likely to provide greater flexibility for Indian residents to manage their foreign exchange transactions and facilitate seamless remittances, as per reports.

Commenting on the development, MD and Group CEO of GIFT City, Tapan Ray, said, “This decisive move aligns GIFT IFSC with other global financial centers, allowing resident investors to leverage our platform for a wider range of overseas investments and expenditures."

"By clarifying the use of LRS for investments and enabling transactions like insurance and education loan payments in foreign currency, the RBI has significantly enhanced the attractiveness and utility of GIFT IFSC,” Ray added.