Cash transfers abroad just short of $1 bn in May
Indian residents sent close to $1 billion abroad in May 2018 under the Liberalised Remittance Scheme (LRS) to meet expenses for travel, studies abroad, and maintenance of close relatives, etc.
In the same month last year, resident Indians had sent $847 million, according to the Reserve Bank of India data.
In April 2018, remittances stood at $929 million. In 201718, Indians spent about $11.33 billion through the LRS.
A look at the pattern of spending in May 2018 shows that out of $996 million, over $364 million went for travel, followed by $248.8 million on maintenance of close relatives, and $178 million on education. Gifting came fourth at $118 million, and $31 million accounted for making deposits.
Under the LRS, all resident individuals, including minors, are allowed to freely remit up to a quarter of a million dollars per financial year for any permissible current or capital account transaction, or a combination of both. Individuals can avail of foreign exchange facility for the purpose, within the limit of $250,000.
The scheme was introduced on February 4, 2004, with a limit of $25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. The RBI in April 2018 amended rules for tracking transactions under the LRS. Under the new regime, authorised dealers (banks) provide a daily report on transactions undertaken by individuals under the LRS.
These reports will be accessible to other ADs. This was done to improve monitoring and to ensure compliance with LRS limits.
Earlier, transactions under the LRS were permitted by AD banks based on the declaration made by the remitter.
The monitoring of adherence to the limit was confined to obtaining such a declaration without independent verification, in the absence of a reliable source of information.
In June 2018, the RBI made it mandatory for remitter to furnish their Permanent Account Number (PAN) for making remittances under the LRS. PAN details are used as a unique identifier to aggregate the remitter-wise data.