Mumbai, October 28: The Reserve Bank of India (RBI) has reportedly proposed a new sub-limit on certain overseas payments under the Liberalised Remittance Scheme (LRS), as part of efforts to reduce dollar outflows. According to sources, the proposed sub-limit is Rs 50 lakh, and it is meant to curb outflows and support foreign exchange reserves.
What is being proposed
Business travel and pilgrimages may also come under the proposed Rs 50 lakh sub-limit. The cap would sit inside the existing overall limit. There is currently no universal sub-limit on LRS transactions, and the overall LRS limit is USD 250,000 (around Rs 2 crore) per financial year.
What may stay outside
Education and medical expenses are likely to be kept outside the limit, sources told Zee Business. The proposal is also not described as a replacement for the overall USD 250,000 LRS limit.
Why RBI is considering it
The sub-limit aims to curb dollar outflows and also boost FDI and FII inflows.
What LRS covers today
LRS was introduced in 2004 so resident individuals could remit foreign exchange for permitted purposes without prior RBI approval. Permitted uses include private visits, gifts, employment abroad, maintenance of relatives, business travel, medical treatment, studies abroad and other current account transactions.
International travel is the biggest segment. It accounted for $13.10 billion of the $22.82 billion remitted under LRS in April-December 2024.
Investor concerns
The report has also triggered worry about overseas investing. Some social media posts claim the RBI wants to restrict capital account outflows under the automatic route, which would hit US stock investing by Indians. That claim is unverified and was not part of the sub-limit details reported by Zee Business.
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