Thursday, September 29, 2022

ICICI Bank Users Are Not Allowed To Use LRS For Investing In Cryptos

ICICI Bank customers would no longer be able to use the RBI’s Liberalised Remittance Scheme (LRS) for crypto-related activities, according to a report.

A few months ago, while distancing itself from cryptocurrencies, ICICI Bank asked the payment gateway operators to stop providing their services to the crypto exchanges in the country. Following that order, now the bank has asked its customers to not use the LRS by RBI for any investment related to cryptocurrency.

Recently, the bank released a declaration under Foreign Exchange Management Act (FEMA). This declaration is a part of bank’s ‘retail outward remittance application form’ which will not allow the customers to use their proposed investment for buying cryptos. 

According to the declaration, “The above remittance is not for investment/purchase of bitcoin/cryptocurrencies/virtual currencies (such as ethereum, ripple, litecoin, dash, peercoin, dogecoin, primecoin, chinacoin, ven, bitcoin or any other virtual currency/cryptocurrency/bitcoin).”

Further, it has been mentioned that if any unit of mutual funds/ shares or the company’s capital instrument is related to cryptocurrencies or dealing in it, then the customer could use the retail outward remittance for the investment. 

ICICI Bank, in its declaration, has said that in order to enjoy the services of RBI’s LRS, the customer must first agree with all the terms and conditions of the bank.

LRS has been a major source of crypto investment, said the founder of one of the crypto exchanges in India. “With ICICI Bank having come up with such a declaration, other major banks will shut the LRS doors for crypto investments. This will impact the value of transactions of the Indian crypto market.” 

On February 04, 2004, the RBI introduced LRS under FEMA, 1999, with a limit of $250,000. Under this scheme, the authorized dealers are allowed to grant the remittances by resident individuals up to $250,000 per financial year for any permitted currency or capital account transaction or a combination of both. 

While talking about cryptocurrencies, Mohandas Pai, the former CFO of Infosys, mentioned that in today’s time, many people in India are trying to invest in cryptos. However, most of them are not very sure, what is its future in India, therefore, they prefer LRS to process the investment on the foreign exchanges.

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