Mumbai, Aug. 14: The dreaded capital controls are back.
The Reserve Bank today drastically cut the amount of money that resident Indians can remit abroad to $75,000 a year from the earlier limit of $200,000 under a scheme that was formulated in 2004.
Under the Liberalised Remittance Scheme, individuals can invest in shares, buy units of mutual funds and venture capital funds, acquire shares under reward schemes for top employees of multinationals, and set up joint ventures abroad.
Besides slashing the remittance limit by 62.5 per cent, the central bank said individuals could no longer spend money under the scheme to buy property abroad, cracking down on a recent trend that has seen rich Indians snapping up homes in depressed property markets like Dubai and the US.
The capital controls have also been imposed on companies planning to invest in their subsidiaries abroad.