How to Maximize Your Savings with the Liberalized Remittance Scheme (LRS)
The Liberalized Remittance Scheme (LRS) is a great way to save money on international money transfers. By understanding the regulations of the scheme and choosing the right exchange rate, it is possible to maximize your savings. Here are some Vested tips on how to make the most of LRS to maximize your savings.
Overview of the Liberalized Remittance Scheme (LRS).
The Liberalized Remittance Scheme (LRS) was introduced by the Reserve Bank of India (RBI) in 2004. It allows Indian residents to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.
Remittances under LRS can be made through:
- Banking channels – banks authorized by RBI can offer LRS facilities to their customers. These banks will have to ensure that all inward and outward remittances are reported to RBI’s Centralised Information Management System (CIMS).
- Non-banking channels – authorized dealers (ADs), money changers (MCs) and Full Fledged Money Changers (FFMCs) can also offer LRS facilities to their customers. Outward remittances through these channels have to be routed through banking channels only.
What are the Benefits of the Liberalized Remittance Scheme (LRS)?
The main benefits of LRS are as follows:
- It provides greater flexibility and convenience for individuals who need to make foreign currency payments for various purposes such as business, travel, medical expenses, emigration, etc.
- It helps promote orderly development and maintenance of the foreign exchange market in India.
- It enhances transparency as all transactions have to be reported to RBI’s CIMS.
- It helps contain black money as it discourages hoarding of unaccounted foreign currency notes.
