33 billion abroad under the Liberalised Remittance Scheme in FY2017-18. 73 billion, the highest on record.
Those numbers are the result of two decades of rule changes, identity infrastructure and settlement reform, most of it built for reasons that had very little to do with investing abroad. ET SpotlightThe paper eraThe Liberalised Remittance Scheme began in February 2004 with an annual allowance of $25,000.
The ceiling climbed quickly, to $50,000 in December 2006, $100,000 in May 2007 and $200,000 by September 2007. It was reduced to $75,000 in August 2013, a temporary measure adopted while the external account was under strain, then restored to $125,000 in June 2014 and set at $250,000 in May 2015, where it stands today.
Buying foreign exchange traditionally requires Form A2. This is the declaration a resident makes to the bank sending the money, setting out how much foreign currency is being bought and for what purpose, and confirming that the transaction is permitted under India's foreign exchange law.
Through the scheme's first decade it had to be printed, signed by hand and submitted at a bank branch during working hours. Owning a foreign share required considerably more.
A resident investor opened an overseas trading account through an Indian broker's foreign partner, completed a separate account-opening form for that partner, signed the LRS declaration, signed a FEMA declaration, and formally authorised a designated bank as the authorised dealer. The domestic requirements were comparable.
A demat account meant physical forms, proof of identity and address in hard copy, in-person verification conducted at a branch, and a power of attorney executed for settlement. By 2015 the allowance was ample for almost any individual investor.
The procedure for using it had not changed in step. The digital rebuildThe rebuild started with the paperwork and the rails.
Online submission of the Form A2 declaration was permitted in February 2016, capped at USD 25,000, and UPI launched two months later to give India a domestic payment rail that cleared in seconds. Identity was rebuilt over the five years that followed.
The Central KYC Registry became operational for regulated entities, DigiLocker documents were granted legal parity with physical originals, and video-based customer identification was permitted in January 2020, which made remote account opening lawful rather than merely convenient. The Account Aggregator framework went live in September 2021, so a person's own financial records could be shared on their instruction instead of being reassembled document by document.
