Capitalmind Mutual Fund CEO Deepak Shenoy has called for a sweeping simplification of India's overseas remittance rules, arguing that the government should ease reporting requirements instead of tightening restrictions on money transfers abroad.
His remarks come amid reports that the Reserve Bank of India (RBI) has proposed a Rs 50 lakh sub-limit on certain transactions under the Liberalised Remittance Scheme (LRS), including business travel and pilgrimages, to curb dollar outflows and support the country's foreign exchange reserves.
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"In the light of 'rumours' of RBI asking fin min about reducing LRS limits," Shenoy wrote on X, adding that the limits were entirely within the RBI's control.
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"I think it would be a bad thing to keep changing this LRS limits, and in fact I'd even remove the entire reporting requirements for both outflows and inflows completely," he said.
Shenoy also called for relaxing rules governing non-resident Indian (NRI) remittances and simplifying know-your-customer (KYC) procedures. He argued that consulates should not have to be involved in the process and suggested that reporting requirements could be limited to transactions exceeding Rs 5 crore.
His comments come as the reported RBI proposal raises questions about how residents can spend and invest overseas under the existing remittance framework.
What Is The LRS Limit?
Introduced in 2004, the Liberalised Remittance Scheme allows resident individuals, including minors, to remit up to $250,000 (around Rs 2 crore) per financial year for permitted current and capital account transactions.
These include overseas investments, foreign travel, education, medical treatment, gifts and financial support for relatives living abroad. Certain transactions, including remittances for overseas foreign-exchange trading and margin payments to foreign exchanges, are prohibited.
According to a Zee Business report published on October 27, the RBI has proposed a Rs 50 lakh sub-limit for specified categories of remittances within the existing annual LRS ceiling. Business travel and pilgrimages could fall under the proposed restriction, while education and medical expenses are likely to be excluded.
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The proposal has not been formally implemented, and no effective date has been announced in the reports cited.
The reported proposal would introduce additional restrictions on selected categories of overseas spending without changing the overall LRS ceiling. Shenoy, however, has advocated a broader rethink of the regulatory approach.
His suggestion to remove reporting requirements for both inward and outward remittances would represent a significant departure from the existing compliance framework. The proposal would also raise questions about how authorities could maintain oversight of cross-border financial flows while reducing the burden on individuals and businesses.
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