Outward remittances cross $1 bn in Sept 2017

The Liberalised Remittance Scheme (LRS), which allows resident Indians to send money abroad, is back in focus on account of money-laundering concerns.

About two years ago, the scheme had come under the Reserve Bank of India’s (RBI’s) scanner because of a sharp rise in remittances. Till the time of going to press, the RBI did not respond to queries by Business Standard on reports about it scrutinising the LRS.

Remittances grew by 60 per cent to $1,093 million in September from $683 million in September last year, according to the RBI data. However, overseas investments made in equity and debt under the LRS have a small share in the money spent under scheme. It is the money sent for travel, education, and maintaining close relatives that has the lion’s share in outward remittances.

The money sent for travel rose to $398 million in September from $217 million a year ago. The amount spent on maintaining close relatives jumped from $160 million in September last year to $227 million in September this year. Banks can allow Resident Indians to send up to $250,000 per financial year for current or capital account transactions or a combination of both. The scheme is not available to companies, partnership firms, Hindu Undivided Families, and trusts.

According to the RBI data, the funds sent under the LRS by resident individuals to study abroad rose to $278 million in September from $160 million a year ago.

In 2015, remittances for maintaining close relatives jumped 11 times to $124.2 million in July that year from $11.1 million in July 2014.

The funds sent under the LRS for resident individuals to study abroad rose six-fold to $113.9 million in July 2015 from $18.2 million a year ago.