India 180-day fund rule triggers offshore credit card curbs for residents

Banks in global financial hubs, including Zurich, London, and Singapore, have begun reassessing international credit card facilities for wealthy Indian residents due to strict compliance hurdles regarding India’s 180-day fund repatriation rule. The move follows reports that offshore lenders are hesitant to renew cards linked to accounts that may fall foul of the Reserve Bank of India’s (RBI) foreign exchange mandates. The 180-Day Deployment Mandate Under India’s Liberalised Remittance Scheme (LRS), resident individuals are permitted to remit up to $250,000 per financial year for specific purposes such as education, travel, or investment. However, RBI regulations dictate that any foreign exchange acquired but not utilized for the intended purpose must be surrendered or repatriated to India within 180 days. Legal experts, including Moin Ladha of Khaitan & Co, noted that this creates a challenge for offshore banks, as resident Indians cannot legally maintain idle cash balances abroad indefinitely to support credit card limits. Exemption for UAE-Based NRIs The restriction does not apply to Non-Resident Indians (NRIs) living and working in the UAE. Under the Foreign Exchange…