With a view to deepen the financial markets in International Financial Services Centres (‘IFSCs’) and provide an opportunity to resident individuals to diversify their portfolio, Reserve Bank of India (‘RBI’) had, by way of Circular dated February 16, 2021, amended the Liberalised Remittance Scheme (‘LRS’) and permitted resident individuals to make remittances under LRS to IFSCs set up in India. One of the conditions through which resident individuals were allowed to make remittances under LRS to IFSCs in India was that any funds lying idle in the Foreign Currency Account (‘FCA’) in IFSCs for a period up to 15 days from the date of its receipt into the FCA will be immediately repatriated to domestic INR account of the investor in India.

With an objective to align the LRS for IFSCs set up under the International Financial Services Centres Authority Act, 2019 vis-à-vis other foreign jurisdictions, the RBI has, by way of Circular dated April 26, 2021, done away with the requirement of repatriation of idle funds lying in the FCA for more than 15 days. The manner of utilization of funds in the FCA will now be governed by the provisions of the scheme as contained in the Master Directions on LRS.