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Monday, November 29, 2021

Remittances under LRS increase 56% in the first semester of 22

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Resident Indians sent close to $ 2 billion abroad in September under the liberalized regime Remittances Scheme (LRS), touching a three-year high that analysts speculate could be for buying cryptocurrencies. More than 60 percent of the money remitted is for travel abroad and studies, which are again at multi-year highs. RBI the data indicate.

Overall, remittances abroad under LRS increased 56 percent during April-September ’21 to $ 8.9 billion compared to $ 5.7 billion in the same period a year ago. the Reserve Bank of India (RBI) allows resident Indians to send abroad up to $ 250,000 a year per person under the Liberalized Remittance Scheme (LRS) for a series of checking account transactions including travel abroad, study abroad, support of close relatives , gifts and donations, among others. . In addition to capital account transactions, such as investing in deposits, stocks, and bonds, property purchases are also included in LRS.

Analysts speculate that there is a possibility that money remitted under any permitted LRS heading could subsequently be used for any purpose, including the purchase of cryptocurrencies. Experts say such transactions, if any, could be in violation of the law. Combined remittances in capital account transactions: deposits, property purchases, and investment in stocks and bonds together increased 25 percent to $ 765 million during the period, albeit on a small basis.

“The LRS Scheme allows remittances to be sent to foreign currency accounts held abroad, however, such funds must be used in accordance with exchange control regulations.” said Moin Ladha, partner at law firm Khaitan and Co. “There is ambiguity in the treatment of cryptocurrency under these regulations, therefore any such transaction using the LRS fund held in a foreign currency account abroad it must be carefully evaluated from a compliance perspective. ”

But remittances under two headings: travel and study abroad nearly doubled over the period. While travel spending increased from $ 1.4 billion to $ 2.4 billion in the first half of fiscal year 22, remittances to study abroad increased from $ 1.5 billion to $ 3 billion during the period.

Experts say that much of the money spent could be due to the release of international travel restrictions due to the pandemic. “We are seeing an increase in travel and study abroad. A large pent-up demand has emerged. The United States has opened up, a major travel destination for Indians,” said Harsh Kumar Bhanwala, CEO of Capital India Finance, who Remittances under the RemitX brand. “In terms of study abroad, several students who had opted for online courses last year due to restrictions imposed by the pandemic are now returning to campus classes when universities open for real-time study.”

From the perspective of the balance account, it is possible that the gains obtained in the previous one will not continue due to the increase of these exits.

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