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RBI allows foreign currency account for resident Indians

The Reserve Bank of India, in a move to liberalise the country's archaic foreign exchange rules, on Friday allowed resident Indians to open a domestic foreign currency account without any limit on balances.

The bank said foreign currency to be deposited in such accounts would have to be earned through permissible channels like payments received for services on a visit abroad, or remittances from a person who was not a resident of India.

Cash gifts and unspent foreign exchange acquired by a resident Indian during an overseas visit could also be deposited in this account, the central bank said.

Currently residents can retain only up to $2,000 in cash or in travellers cheques.

The central bank has been steadily liberalising foreign exchange rules amid record reserves, which touched $64 billion on October 18. India's currency is presently convertible only on the current account.

In September, the central bank allowed domestic firms to borrow up to $50 million from global sources, without government approval and also permitted pre-payment of foreign loans ahead of schedule.

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