More Stories

Informist, Thursday, May 29, 2025

--RBI: Revised liberalised remittance scheme with changes in process 

--RBI: Resilient services exports, inward remittances likely to cushion CAD 

NEW DELHI – India continues to be the top recipient of remittances, with inward remittances to the tune of $137.7 billion in 2024, the Reserve Bank of India said Thursday. A robust outlook for India's services trade balance and inward remittance receipts is expected to keep the current account deficit well within sustainable limits during the financial year 2025-26 (Apr-Mar), the central bank said in its Annual Report for FY25.

India's current account deficit was contained at $37.1 billion, or 1.3% of GDP, in Apr-Dec, as compared with $30.7 billion, or 1.1% of GDP, a year ago, the central bank said. Inward remittances and net services receipts also helped India to largely offset an expansion in merchandise trade deficit, it added. India's merchandise trade deficit during Apr-Dec widened to $210.77 billion from $189.74 billion a year ago, up over 11% on year.

In a staff paper, the RBI had said in March that the share of advanced economies in India's inward remittances has surpassed the share of the Persian Gulf economies, reflecting a shift in migration patterns. The results of the sixth round of the RBI's India's Remittances Survey showed that India's remittances from the US, the UK, Singapore, Canada, and Australia are now higher than remittances from the Gulf Cooperation Council countries. The US had the largest share in India's total remittances at 27.7% in FY24, rising from 23.4% in FY21, reflecting a steady recovery in the US jobs market, according to the staff paper.

The finance ministry has time and again said India continues to receive healthy remittances and is working to make the process smoother. It had decided in May 2023 to make changes to the Liberalised Remittance Scheme and bring international credit card spending under the scheme. However, the move could not be implemented as the banking system was unprepared. If international spending is brought under the Liberalised Remittance Scheme, such transactions will attract 20% tax collected at source.

In the Annual Report for FY25, the RBI said it has undertaken a comprehensive review of the Liberalised Remittance Scheme to address issues in legal framework, annual limit, permitted purposes, and payment modes or currencies. "Consequently, the revised scheme, along with the necessary amendments to Foreign Exchange Management Rules and Foreign Exchange Management Regulations, is in process," the RBI said.

Under liberalised remittance, the RBI allows Indian residents to spend up to $250,000 in a financial year outside the country without seeking prior approval from the central bank. Earlier, credit card spends were not part of this limit. The government, in May 2023, amended the rules under the Foreign Exchange Management Act to include credit card spending abroad under the scheme. Currently, individuals can make payments up to INR 700,000 per financial year using their international credit and debit cards without attracting additional tax.  End

US$1 = INR 85.50

Reported by Priyasmita Dutta

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.