RBI orders SBM Bank to stop all transactions under Liberalised Remittance Scheme

The Reserve Bank of India (RBI) on Monday, January 23, directed SBM Bank (India) Ltd to stop, with immediate effect, all transactions under the Liberalised Remittance Scheme (LRS) till further orders. The central bank said that some significant supervision concerns observed at the bank were the basis for its action.

The LRS is a programme that allows individuals in India, including minors, to freely remit up to $2,50,000 per financial year (April-March) for a variety of permissible transactions, such as current or capital account transactions or a combination of both.

However, the scheme is not available to corporations, partnership firms, HUFs, trusts, etc.

The LRS was first introduced on February 4, 2004, with a limit of $25,000. Over the years, the limit has been increased in stages to keep up with the changing economic conditions.

SBM Bank (India) Ltd is a Mumbai-based bank that has been operating as a branch of SBM Bank (Mauritius) Ltd since 1994. On December 1, 2018, it became the first universal bank in the country to receive a banking licence from RBI through the wholly-owned subsidiary route.

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