RBI permits residents to open foreign currency accounts at GIFT City, eases LRS norms

The Reserve Bank of India (RBI), via a circular issued on July 10, has allowed resident individuals to open foreign currency account (FCA) at GIFT City.

The banking sector regulator also eased the norms pertaining to remittances to International Financial Services Centres (IFSCs) in India under the Liberalised Remittance Scheme (LRS).

RBI said that after conducting a review, it has been decided that "authorised persons" may facilitate remittances for all permissible purposes under LRS to IFSCs for availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019, within IFSCs.

At present, remittances under LRS to IFSCs were allowed only for making investments in in securities - except those issued by entities based in India (outside IFSC) - and payment of fees for education to foreign universities or foreign institutions in IFSCs.

However, the LRS norms have been eased with the latest circular issued by the RBI. Now, authorised persons may also facilitate remittances for "all current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs", it stated.

Banks permitted to use Brickwork ratings

In another key circular issued on Wednesday, the RBI allowed banks to use ratings by Brickwork Ratings India Private Limited for loans of up to ₹250 crore.

The RBI, in October 2022, asked banks and other regulated entities not to obtain any fresh ratings from Brickwork Ratings India.

The Certificate of Registration granted to Brickwork Ratings India as a Credit Rating Agency (CRA) was cancelled by market regulator Sebi in October 2022.

After a review of the October 2022 circular, the RBI on Wednesday permitted banks to use the ratings of the CRA for risk weighting their claims for capital adequacy purposes, subject to certain conditions.