RBI Guidelines for Foreign Exchange Transactions Explained

All you need to know about RBI guidelines for Foreign Exchange Transactions.

Key Takeaways

RBI allow remittance of up to USD 25,000 per calendar year.
You can remit in foreign currency for an RBI-approved purpose.
You can buy FOREX up to USD 25,000 only.
If you bring FOREX beyond a specified limit to India, you must declare it.
You may keep a maximum of USD 2,000 (or equivalent) in cash notes or Traveller’s Cheques.

Whether you wish to travel abroad or make international money transfers, you may need foreign currencies from time to time. In India, the foreign exchange (Forex) transactions are governed by the Reserve Bank of India (RBI) via the Foreign Exchange Management Act (FEMA). As someone with access to foreign currency, you should know RBI guidelines for Foreign Exchange Transactions. Read on.

RBI Guidelines for Outward Remittance

For outward remittance transfers conducted by resident individuals, the FEMA guidelines are listed under the Liberalized Remittance Scheme (LRS).

Maximum Limit

According to the LRS, a Person Resident in India can transfer funds up to the LRS limit of USD 25,000 per calendar year for any permissible current or capital account transactions or a combination of both.

Approved Institutions

RBI approves two kinds of institutions, or authorised persons, which can facilitate sending of money abroad:

AD Banks (Authorised Dealer – I)
Money changers having AD-II category licence (Authorised Dealer – II).

Mandatory Requirements

For successful FOREX transactions undertaken per RBI guidelines for foreign exchange transactions, you must comply with RBI requirements. You should send funds according to RBI-approved purposes and submit the Know Your Customer (KYC) documents.

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RBI Rules on Currency Exchange

You must submit the required KYC documents while buying foreign currency.
You may purchase the forex only up to 60 days before the travel as mentioned on your air ticket.
You can only buy forex of up to USD 25,000, or its equivalent in any currency. Of this amount, you may purchase cash of up to USD 2,000 and carry the remaining money on a FOREX card or via travellers’ cheques for the trip.
You can make cash or online payments, with the total transaction value not exceeding Rs 50,000.

RBI Rules to Sell Foreign Currency

Per the RBI guidelines for Foreign Exchange transactions, you may sell forex if you follow these rules.

You must submit the required KYC documents for selling foreign currency.
Within 180 days of returning to India, you must surrender unspent forex kept in cash and traveller’s cheques. You can only keep foreign exchange up to USD 2,000, or its equivalent in other currencies, in foreign currency notes or travellers’ cheques.
You can bring back any amount of forex to India. However, if you have currency notes of more than USD 5,000, or currency notes and travellers’ cheques more than USD 10,000, you must declare the same through a Currency Declaration Form (CDF).
After selling the foreign currency, if you receive less than INR 50,000, the bank or money changer can transfer the money as cash, cheque, or via online transfer to your bank account (NEFT). If it exceeds this amount, then you can only receive the money through NEFT/RTGS.

International Fund Transfers with DBS Bank

With DBS Bank, you can easily and conveniently transfer money abroad. Utilise our remittance and international money transfer options and conduct online transactions via the DBS Bank website and app! Remember to follow RBI Guidelines for Outward Remittance while transferring funds.

Download digibank by DBS to experience the seamless process of sending and receiving money from abroad and even open your savings account with us.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.