According to the rules of the Reserve Bank, the idle money lying in an international bank account should be invested or brought back within 180 days. Because of this strictness, foreign banks are in action.
Apart from the strict rules imposed by the Central Reserve Bank (RBI), many international banks are closing the accounts of rich Indians due to the high minimum balance requirement. According to an Economic Times report, the international bank accounts of more than two dozen high-net-worth individuals (HNIs) have been closed in the last two months. This action has been taken by two British banks, a Swiss bank and a major Emirates lender.
Bank accounts were opened under LRS
These rich people of India had opened bank accounts by transferring money abroad under the Liberalized Remittance Scheme (LRS) of RBI. Under this, a local person is allowed to invest up to $250,000 per year through stocks, properties etc. Some large international banks require a minimum balance of at least $1 million. For high-net-worth individuals (HNIs) who do not have minimum balance in their accounts, banks suggest using the bank’s wealth management service to invest in stocks and loans. Since the bank makes profits from such investments, it wants to retain the customer even if the minimum balance in the account is low.
On closure of international bank accounts, Rajesh P Shah, partner at CA firm Jayantilal Thakkar & Co, said, “Parties receiving such emails should follow the rules by sending the money immediately.”
There is also a problem with the rules of the Reserve Bank
There is also a problem with the rules of the Reserve Bank. According to the rules of the Reserve Bank, the idle money lying in an international bank account should be invested or brought back within 180 days. A Singapore bank recently contacted some of its customers in India and asked them to invest money as idle money may be in violation of Indian regulations.
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