Forex Guidelines by RBI Explained – Know your Forex Exchange Limits
Whenever you travel abroad or transfer money overseas, you may need to exchange foreign currencies. The Reserve Bank of India (RBI) regulates foreign exchange (Forex) transactions in India via Foreign Exchange Management Act (FEMA). The FEMA Act defines outward remittance limits, TCS on foreign remittances, and guidelines for various entities and organizations. Here’s everything you need to know about RBI guidelines for foreign exchange transactions.
Guidelines for Outward Remittance by RBI
These are the FEMA guidelines under the Liberalized Remittance Scheme (LRS) that resident individuals must follow when sending money abroad from India:
Maximum Limit
In accordance with the Liberalised Remittance Scheme, all Indian residents are allowed to remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
Authorized Institutions
To facilitate international money transfers, the Reserve Bank of India (RBI) has approved two types of institutions or authorized dealers:
- AD Banks (Authorised Dealer – I)
- Money changers having AD-II category license (Authorised Dealer – II).
Mandatory Requirements
- In order to carry out successful forex transactions, you must comply with the RBI guidelines for foreign exchange transactions.
- It is important to send funds according to RBI-approved purposes and to submit “Know Your Customer (KYC)” documents.
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Guidelines for Currency Exchange by RBI
If you are buying or selling foreign currency, you are required to comply with the below RBI guidelines.
Buy Currency:
- In order to purchase foreign currency, you have to submit KYC documents.
- You can buy forex worth up to USD 2,50,000, or its equivalent in any other currency.
- Up to USD 3000 may be purchased in cash and the remaining money may be carried via Forex cards or travelers’ cheques.
- The currency may only be purchased up to 60 days before the travel date, as indicated on your air ticket.
- Payments can be made in cash or online, but the total amount of the transaction must not exceed Rs 50,000.
Sell Currency:
- In order to sell foreign currency, you have to submit KYC documents.
- When returning to India, you must surrender unspent forex held in cash within 90 days, and those held in traveler’s checks and forex cards within 180 days.
- It is only permitted to keep foreign exchange in foreign currency notes or travelers’ cheques up to USD 2000 or equivalent in any other currency.
- You can bring back any amount of forex to India as long as you declare the same through a currency declaration form (CDF) if you have more than USD 5,000 in currency notes or USD 10,000 in traveler’s cheques.
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FAQs
At its core, forex trading is about capturing the changing values of pairs of currencies. For example, if you think the euro will increase in value against the U.S. Dollar, a speculator might buy euros with dollars.
What are the RBI guidelines for foreign exchange transactions? ›
Documents to be submitted:
- Passport.
- PAN.
- Address proof such as: Telephone bill/ bank account statement/ letter from recognized public authority/ electricity bill/ ration card/ Letter from employer.
- Copy of Ticket.
- Visa if applicable.
- Self declaration cum undertaking form.
How much forex can you carry when going abroad? When traveling overseas, as an Indian resident, you are allowed to carry an unlimited amount of foreign currency. You should know that this is subjected to CDF (Currency Declaration Form) filing at Customs in the case of $10,000 or $5,000 conditions prescribed.
How many Indian rupees can NRI carry out of India? ›
(i) Export of Indian Currency is strictly prohibited. However Indian residents when they go abroad are allowed to take with them Indian currency notes not exceeding Rs. 25,000/-.
How do beginners explain forex? ›
Forex explained
The aim of forex trading is simple. Just like any other form of speculation, you want to buy a currency at one price and sell it at higher price (or sell a currency at one price and buy it at a lower price) in order to make a profit. We all trade forex if we go on holiday abroad.
Is $10,000 cash limit per person or family? ›
Members of a family residing in one household must declare if the members are collectively carrying over $10,000. If you and your wife are each carrying $6,000, you'd need to report that. Pocket change matters if you're close to the limit.
How much money can a person carry legally in India? ›
Cash Seizure
Individuals found carrying cash more than Rs. 50,000 or new items worth over Rs. 10,000 without supporting documents will be seized.
What is the limit of foreign exchange in India? ›
Forex Card, Traveler's Cheque, and Remittance
| Regulation | Limit |
|---|
| Cash Limit | Rs. 25,000 |
| Cash (per trip) | USD 3,000 |
| Forex Card/FC Demand Draft/Remittance (per financial year) | USD 250,000 |
| Purchase from authorized person (cash limit) | Below Rs. 50,000 |
PIO / OCI card holders not permanently staying in India - not eligible to buy forex. Only foreign passport holders who are permanently staying in India can buy forex for private visit.
How much money can NRI transfer from India to USA? ›
There are no restrictions on the amount of current income that NRIs can repatriate from their NRO account, including rent, dividends, pensions, interest, and so forth. Nevertheless, the amount of assets (other than current revenue) that can be remitted is limited to $1 million per fiscal year.
There is no tab on the amount of money an NRI can send to India. However, the money being sent must be earned legally. Also, the sender needs to pay required taxes in the country where it has been earned.
What is forex in simple terms? ›
Forex is foreign exchange, which refers to the global trading of currencies and currency derivatives. It is the largest financial market in the world, involving the buying and selling of currencies in pairs, taking advantage of changing rates.
How do you explain forex to someone? ›
Forex trading, also known as foreign exchange or FX trading, is the conversion of one currency into another. FX is one of the most actively traded markets in the world, with individuals, companies and banks carrying out around $6.6 trillion worth of forex transactions every single day.
What is forex trading in layman's terms? ›
A forex trader buys one currency while selling the other. For example, a trader buying the EUR/USD pair is long the euro (EUR) and short the U.S. dollar (USD). And the rate is simply the ratio—the numerator over the denominator. Other actively traded pairs include USD/JPY, GBP/USD, USD/CAD, AUD/USD, and NZD/USD.
How do you explain forex market? ›
The foreign exchange market or forex market is the market where currencies are traded. The forex market is the world's largest financial market where trillions are traded daily.
