India is getting stricter about how resident Indians send money abroad. According to two government sources, the Reserve Bank of India (RBI) plans to bar remittances into offshore time deposits—foreign currency accounts that lock in money for interest.
In March 2025 alone, remittances into such deposits jumped to $173.2 million, up from $51.62 million in February, RBI data shows. That spike got the regulator’s attention. Now, the central bank wants to make sure this money isn’t being quietly stashed abroad for passive gains.
So, what does this mean for everyday Indians?
If you’re planning to send money abroad for education, travel, investing in global stocks or real estate, you’re still good. But if your idea was to move money overseas just to earn interest in a foreign bank? That’s a no-go soon.
The change targets the Liberalised Remittance Scheme (LRS), which lets resident Indians send up to $250,000 a year abroad. It’s a popular route for students, investors, and even those funding overseas medical treatment.
But here’s the twist: a growing chunk of that money isn’t doing anything productive. It’s just sitting in foreign bank accounts, racking up interest. And that—according to the RBI—is not cool.
“This is passive wealth shifting,” said one official familiar with the RBI’s thinking. “In a still-controlled capital regime like India’s, that’s a red flag.”
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Translation? India doesn’t want its citizens to quietly move wealth abroad and leave it there. Especially not while it’s trying to stabilize the rupee and protect its foreign exchange reserves.
There’s more. The RBI wants to close all backdoors. Meaning: no sneaky tricks with alternate account names or loopholes. It’s planning a legal framework overhaul to keep the scheme clean and focused.
Despite a small dip in annual remittances—from $31 billion last year to $30 billion this year—regulators remain cautious. The ease of global investing via fintech apps has led to more Indians dabbling with cross-border capital moves.
One official summed it up: “The scheme’s spirit is being stretched. This fix brings it back in line with India’s cautious play on capital account convertibility.”
Still, not all investments are under fire. Equity, mutual funds, and real estate abroad are still fair game under LRS. It’s just the passive parking that’s getting booted.
Bottom line?
India’s central bank is sending a message: global exposure is fine. Silent exits aren’t.
So next time you think about remittance, think purpose—not parking.
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