Due to consistent weakness of Indian currency Rupee against Dollar ,RBI and Government has taken some tough steps to stop the increase in currant account deficit and depreciation of Rupee against other currencies specially against Dollar.
Liberalised Remittance Scheme for Resident Individuals- Reduction of limit from USD 200,000 to USD 75,000 :On a review of the scheme, it has now been decided to reduce the existing limit of USD 200,000 per financial year to USD 75,000 per financial year (April - March) with immediate effect. Accordingly, AD Category – I banks may now allow remittance up to USD 75,000 per financial year, under the scheme, for any permitted current or capital account transaction or a combination of both. Further, the following changes / clarifications in regard to the remittances under LRS will come into effect immediately :
The LRS scheme can not be used to acquire immovable property abroad: The scheme should no longer be used for acquisition of immovable property, directly or indirectly, outside India. Therefore, AD Category-I banks may henceforth not allow any remittances under the LRS Scheme for acquisition of immovable property outside India.
The scheme should not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery etc., as hitherto.
Resident individuals have now been allowed to set up Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS) outside India for bonafide business activities outside India within the limit of USD 75,000 with effect from August 5, 2013 and subject to the terms and conditions stipulated in Notification No.FEMA 263/RB-2013 dated August 5, 2013.
Loan to NRI in Rupee Limit reduced :Further, the limit for gift in Rupees by Resident Individuals to NRI close relatives and loans in Rupees by resident individuals to NRI close relatives in terms of A.P. (DIR Series) Circular No.17 and 18 both dated September 16, 2011 shall accordingly stand modified to USD 75,000 per financial year.
Liberalised Remittance Scheme for Resident Individuals- Reduction of limit from USD 200,000 to USD 75,000
Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits :interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits. However, in order to pass on the benefit of exemption provided on incremental NRE deposits with maturity of 3 years and above from CRR/ SLR requirements, it has been decided to give banks the freedom to offer interest rates on such deposits without any ceiling. The extant ceiling on NRO Accounts shall continue.
Interest Rates on FCNR(B) Deposits increased :Interest Rates on Deposits held in FCNR(B) Accounts. In view of the prevailing market conditions, it has been decided that until further notice and with effect from the close of business in India as on August 14, 2013, the interest rate ceiling on FCNR(B) Deposits will be as under:
|1 year to less than 3 years||LIBOR/Swap plus 200 basis points||No change|
|3 - 5 years||LIBOR/Swap plus 300 basis points||LIBOR/ SWAP plus 400 basis points|
On floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/ 400 bps as the case may be. For floating rate deposits, the interest reset period shall be six months.