A resident individual who opened a savings account with a bank three months ago asks it to make a capital account remittance under the Liberalised Remittance Scheme. What does the RBI Master…
Question and options
A resident individual who opened a savings account with a bank three months ago asks it to make a capital account remittance under the Liberalised Remittance Scheme. What does the RBI Master Direction on the scheme require the bank to do?
Allow the remittance but cap it at US$25,000 until the account is a year old
Obtain the prior approval of the RBI before it allows the remittance to be made
Refuse the remittance until the account has been maintained for one full year
Carry out due diligence on the opening, operation and maintenance of the account
Answer and explanation
The LRS Master Direction expects a remitter to have maintained the account with the bank for at least one year before a capital account remittance, but where the applicant is a new customer the authorised dealer must carry out due diligence on the opening, operation and maintenance of the account. The one-year period is therefore not an absolute bar, and no RBI approval or reduced cap applies to new customers.
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