RBI's decision on LRS enhances attractiveness of GIFT IFSC: Ray

RBI Enhances Attractiveness of GIFT IFSC with Expanded LRS Use

New Delhi: The Reserve Bank of India (RBI) has substantially increased the appeal and functionality of the Gujarat International Finance Tec-City (GIFT IFSC) by clarifying the use of the Liberalised Remittance Scheme (LRS) for investments and enabling transactions such as insurance and education loan payments in foreign currency, GIFT City MD and Group CEO Tapan Ray announced on Thursday.

GIFT City, located in Gandhinagar, is envisioned as a premier integrated hub for financial and technological services, not only for India but for the global market. As India’s first International Financial Services Centre (IFSC), GIFT City aims to establish itself as a leading international financial destination.

On Wednesday, the RBI issued a circular that broadens the norms for remittances to International Financial Services Centres (IFSCs) under the Liberalised Remittance Scheme (LRS). According to the new guidelines, "authorised persons" are now permitted to facilitate remittances for all allowable purposes under LRS to IFSCs, thereby supporting financial services and products as outlined by the International Financial Services Centres Authority Act, 2019.

"We at GIFT IFSC welcome the RBI's recent circular that expands the scope of the LRS," said Tapan Ray. "This pivotal move aligns GIFT IFSC with leading global financial centres, enabling resident investors to utilize our platform for a broader array of international investments and expenses."

Ray further noted that the RBI’s clarification on the use of LRS for foreign currency transactions, including insurance and education loan payments, significantly enhances the attractiveness and functionality of GIFT IFSC. This development is expected to strengthen GIFT IFSC’s position as a prominent international financial services hub.

Narinder Wadhwa, Managing Director at SKI Capital, also commented on the RBI's circular, describing the central bank's decision to permit forex accounts in GIFT City—into which money can be remitted for all purposes allowed under the LRS—as a major advancement in enhancing India’s international financial ecosystem.