Quick answer: The Liberalised Remittance Scheme (LRS) is the Reserve Bank of India window that lets a resident individual send up to US$ 2,50,000 abroad in a financial year. It is in the news because RBI data, reported in early November 2026, show Indians sent about US$ 20.09 billion abroad under LRS between January and August 2026, with foreign travel taking the biggest share.
Why the Liberalised Remittance Scheme is in the news
According to RBI figures reported by The Indian Express, resident Indians remitted roughly US$ 20.09 billion under LRS in January–August 2026, up from about US$ 19.08 billion in the same eight months of 2025, a rise of a little over 5%. Spending on overseas travel alone came to about US$ 10.96 billion in this period. Money sent for buying foreign shares and debt rose sharply, to about US$ 2.61 billion from US$ 1.40 billion a year earlier. The newspaper also noted reports that the RBI has floated the idea of curbs to contain these outflows.
The full-year picture is calmer. The RBI Bulletin table released on 25 September 2026 puts total LRS outflows for 2025-26 at about US$ 28.98 billion. That is below the US$ 29.56 billion of 2024-25 and well short of the record US$ 31.73 billion of 2023-24, as reported by Business Standard. Month-to-month figures also move: the same RBI table shows US$ 2.45 billion for July 2025 and US$ 2.58 billion for July 2026.
Key facts about the Liberalised Remittance Scheme
- Started: 4 February 2004, with an initial limit of US$ 25,000. The ceiling has since been raised in stages.
- Present limit: US$ 2,50,000 per financial year (April to March) for any permitted current account or capital account transaction, or a mix of both.
- Who can use it: only resident individuals, including minors. For a minor, the natural guardian must countersign the declaration.
- Who cannot: companies, partnership firms, Hindu Undivided Families (HUFs) and trusts.
- Legal base: the Foreign Exchange Management Act, 1999 (FEMA), which came into force on 1 June 2000.
- PAN is mandatory for every LRS transaction routed through an authorised dealer bank.
- No cap on frequency: a person may remit many times, but the yearly total must stay within the limit.
- Unspent foreign exchange that is not reinvested must be brought back and surrendered within 180 days.
Where the money goes: LRS outflows in 2025-26
| Purpose (RBI category) | 2025-26 (US$ million) |
|---|---|
| Travel (includes travel for education, medical and business) | 16,437.99 |
| Maintenance of close relatives | 3,539.04 |
| Investment in equity/debt | 2,652.01 |
| Gift | 2,594.81 |
| Studies abroad (education availed remotely) | 2,309.74 |
| Deposits | 753.08 |
| Purchase of immovable property | 528.70 |
| Medical treatment (availed remotely) | 58.55 |
| Donations and others | 105.42 |
| Total | 28,979.36 |
Travel accounts for well over half of all outflows. Note the RBI’s distinction: a student who travels abroad is counted under travel, while “studies abroad” covers education taken remotely without leaving India.
What LRS does not allow
The RBI’s FAQ lists several uses that are barred even within the limit:
- Buying lottery tickets, sweepstakes or banned magazines.
- Margin payments or margin calls to overseas exchanges.
- Foreign exchange trading abroad.
- Buying FCCBs issued by Indian companies in the overseas secondary market.
- Capital account remittances to countries listed by the Financial Action Task Force (FATF) as non-cooperative.
- Remittances to individuals or entities flagged as posing a terrorism risk.
Foreign exchange for private visits is allowed to any country except Nepal and Bhutan.
Exam angle: how NDA, CDS and CAPF can ask this
- Economy questions often test the difference between current account and capital account transactions. LRS covers both, which makes it a handy example.
- Expect one-liners on the regulator (RBI), the law (FEMA, 1999) and the limit (US$ 2,50,000).
- LRS outflows link to balance of payments and rupee pressure, both common CDS and CAPF economy topics.
- FATF appears in both economy and internal-security papers. Remember that LRS bars capital transfers to FATF non-cooperative jurisdictions.
Practice MCQs
Q1. What is the current annual limit under the Liberalised Remittance Scheme?
(a) US$ 25,000 (b) US$ 1,00,000 (c) US$ 2,50,000 (d) US$ 5,00,000
Answer: (c) — US$ 2,50,000 per financial year (April–March).
Q2. The LRS was introduced in which year?
(a) 1999 (b) 2000 (c) 2004 (d) 2015
Answer: (c) — it began on 4 February 2004 with a US$ 25,000 limit.
Q3. Which of the following can remit money under LRS?
(a) A Hindu Undivided Family (b) A partnership firm (c) A resident minor, through the guardian (d) A private trust
Answer: (c) — only resident individuals, including minors, are eligible.
Q4. Which category formed the largest share of LRS outflows in 2025-26?
(a) Studies abroad (b) Travel (c) Gifts (d) Investment in equity/debt
Answer: (b) — travel accounted for about US$ 16.44 billion of US$ 28.98 billion.
Frequently asked questions
What is the Liberalised Remittance Scheme?
It is an RBI facility under FEMA, 1999. It allows resident individuals to send up to US$ 2,50,000 abroad each financial year for permitted current or capital account purposes.
Can a minor use LRS?
Yes. Resident minors are covered, but the natural guardian must countersign the LRS declaration form.
Is PAN required for LRS remittances?
Yes. The RBI says a Permanent Account Number is mandatory for all LRS transactions made through authorised persons.
How much did Indians remit under LRS in 2025-26?
The RBI Bulletin puts the 2025-26 total at about US$ 28.98 billion. Travel was the biggest item at about US$ 16.44 billion.
Can LRS money be sent for a holiday in Nepal or Bhutan?
No. The private-visit facility under LRS covers any country except Nepal and Bhutan.
Also read on NCA: National Cooperative Development Corporation | Monthly defence current affairs PDFs | CDS coaching in Chandigarh
Sources: RBI Bulletin, Table 36 (LRS), RBI FAQ on LRS, The Indian Express, Business Standard. Facts as reported up to 3 November 2026.
Featured image background (representative): Sailko / Wikimedia Commons, CC BY 3.0.
