RBI questions dealings under liberalised remittance scheme on laundering suspicion

Amidst the dust and heat around tax havens and black money, the Reserve Bank of India is scrutinising dealings under the liberalised remittance scheme (LRS) that allows resident Indians to invest a maximum $250,000 abroad a year. The regulator is raising new questions — probably driven by suspicion that the window has been misused to launder money.

Many have been asked to explain transactions in offshore unlisted companies set up under LRS, loans to such companies, use of properties purchased abroad and flow of funds from such companies back to India. A few MNC banks are even asking for an undertaking from customers that money remitted to a foreign currency account opened abroad under LRS would not be deployed in onwards overseas investments.

“RBI is raising queries based on the facts of each case. The income from investments through LRS is taxable

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