RBI hikes forex remittance limit to $1,25,000

Mumbai/New Delhi: Acknowledging the recent stability on the forex front, the Reserve Bank of India announced a few measures in its bi-monthly monetary policy today that signal a relaxation of some measures announced last year.

The RBI has relaxed the eligibility limit for foreign exchange remittances. It was earlier possible to remit up to $2 00,000 under the liberalised remittance scheme. This was reduced to $75,000 last year, as a prudential measure when the country was going through a sudden depreciation of its currency.

The RBI has decided to hike the eligible limit to $125,000. Guidelines will be issued shortly, the central bank said.

The recent stability in the foreign exchange market has prompted the central bank to relax this limit under the liberalised remittance scheme (LRS), RBI Governor Raghuram Rajan said in the RBI's second bi-monthlymonetary policy statement for 2014-15 issued today.

In another move, both residents and non-residents (except citizens of Pakistan and Bangladesh) will be allowed to take out Indian currency notes up to Rs 25,000 while leaving the country.

Currently, only Indian residents are allowed to take notes up to Rs 10,000 out of the country. Non-residents visiting India were not permitted to take out any Indian currency notes while leaving the country.

With a view to facilitating travel requirements of non-residents visiting India, the RBI has brought this rule change.

Further, with a view to improving the depth and liquidity in the domestic foreign exchange market, the RBI has decided to allow foreign portfolio investors to participate in the domestic exchange traded currency derivatives market to the extent of their underlying exposures plus an additional $10 million. Domestic entities will also be allowed similar access, the RBI said.

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