Reserve bank reviews liberalised remittance scheme and promotes rupee internationalisation
MUMBAI: The Reserve Bank is reviewing the liberalised remittance scheme, which saw outflows of around $30 billion in FY25, as it looks to tighten oversight and promote the rupee as an international currency.
The central bank is carrying out a comprehensive review of the legal framework, annual limits, permitted purposes, and payment modes under the scheme. A revised framework and amendments to foreign exchange rules and regulations are currently underway.
Similar reviews are ongoing for the money transfer service and rupee drawing arrangement schemes, with the aim of expanding permitted transactions and rationalising guidelines.
The focus is on shifting to principle-based regulation and reducing compliance burdens.
In its annual report for 2024-25, the central bank said it continued efforts to strengthen financial markets by broadening participation, easing access, and streamlining regulations. It said regulations on foreign exchange management were aligned with evolving business practices to improve ease of doing business and promote the rupee internationally.
The foreign exchange department is leading initiatives to support the rupee's international use. It is reviewing several existing rules related to external commercial borrowings, export of goods and services, the supervisory framework for authorised persons, inward remittances, and cross-border settlements in rupees and other local currencies.
To facilitate settlement in rupees, the central bank notified amended FEMA regulations on January 15, 2025.
These allow persons outside India to open special non-resident rupee accounts with overseas branches of authorised dealer banks for all permitted transactions with residents and other non-residents. The framework also permits foreign investment—both direct and portfolio—through repatriable rupee accounts.
The
RBI
introduced several measures to ensure rupee liquidity in cross-border transactions. It signed local currency settlement agreements with the central banks of the UAE in June 2023, Indonesia in March 2024, Maldives in November 2024, and Mauritius in March 2025. These agreements are intended to enable trade invoicing and settlement in local currencies. The central bank said there was some traction in trade settlement in rupees with partner countries.
To support the use of local currencies in trade, the RBI is also backing payment systems such as UPI QR codes and RuPay cards, which are now linked with several countries.
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