RBI to strictly monitor foreign money transfer

Reserve Bank of India

Reserve Bank of IndiaWealthy individuals sending funds to abroad destinations to offshore entities for investment and other purposes will be facing tighter scrutiny from the Reserve Bank of India (RBI).

RBI is now planning to unveil a system where banks will have to maintain a report on individual transactions under Liberalised Remittance Scheme (LRS) on daily basis, in a bid to ensure non-violation of remittance limit $250,000 a year through transactions with multiple banks.

“With the objective of improved monitoring and ensuring compliance with the LRS ceilings, it has been decided to put in place a system for daily reporting of individual transactions by banks,” RBI said.

According to RBI, this step will help the banks to keep a close watch on already transferred remittances prior to allowing further remittance, thus putting a tap on remitter breaching limit by approaching multiple banks.

“The move will help RBI to ensure better monitoring and compliance of LRS limits,” said Moin Ladha, partner at law firm Khaitan and Company. Transactions under LRS are permitted on the basis of declaration performed by the remitter.

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