RBI Lifts Remittance Limits on Online Form A2 Submissions

In a significant move to simplify foreign exchange transactions, the Reserve Bank of India (RBI) issued a circular dated July 3, 2024 to all authorised dealers in foreign exchange, removing limits on remittances made through the online submission of Form A2. This form is used by individuals and entities to declare the purpose and amount of foreign exchange they wish to remit. The policy change aims to streamline international transactions for individuals and businesses, marking a progressive development in India’s financial sector.

Previously, Form A2 submissions were permitted through online and physical modes but were subject to specific conditions and limits. This was outlined in earlier circulars, specifically A.P. (DIR Series) Circular No. 50 dated February 11, 2016, and A.P. (DIR Series) Circular No. 02 dated April 12, 2023. Remittances not requiring documentation, such as certain transactions under the Liberalized Remittance Scheme (LRS), could be processed using only Form A2. However, online submissions were restricted to transactions up to USD 25,000 for individuals and USD 100,000 for corporations.

The removal of these limits is expected to significantly benefit both individuals and businesses. For students studying abroad, families covering medical expenses, and travelers, the elimination of remittance limits simplifies financial planning and reduces bureaucratic hurdles. Businesses engaged in international trade and investments will also find it easier to manage cross-border transactions, enhancing their global competitiveness.

By enabling unlimited remittances through the online submission of Form A2, the central bank is encouraging the adoption of digital financial methods. This is anticipated to boost digital transactions and foster a more transparent and efficient financial system.

Key Changes:

• Removal of Remittance Limits: The most notable change is the elimination of any limits on the amount that can be remitted through the online submission of Form A2. Customers can now make unlimited remittances online, provided they comply with the conditions specified in Section 10(5) of the Foreign Exchange Management Act (FEMA).
• Guidelines for Authorised Dealers: Authorised Dealers must develop appropriate guidelines for facilitating these remittances. These guidelines must be approved by their Board and adhere to the existing statutory and regulatory framework, ensuring that the process remains secure and compliant with all regulatory requirements.
• Continued Compliance: Authorised Dealers must continue to comply with relevant provisions of FEMA 1999 and the ‘Master Direction—Know Your Customer (KYC) Direction, 2016,’ as updated by the RBI. This ensures that the enhanced remittance capabilities do not compromise the integrity and security of foreign exchange transactions.
• Reporting Obligations: The reporting of transactions in the Foreign Exchange Transactions Electronic Reporting System (FETERS) will continue as before. This is crucial for maintaining transparency and regulatory oversight of foreign exchange transactions.

This progressive move by the RBI is poised to create a more dynamic and responsive financial environment in India, making it easier for citizens and businesses to engage in the increasingly interconnected global economy.