RBI to tighten remittance rules, bar offshore time deposits

India's central bank plans to tighten rules for overseas remittances by resident Indians, barring them from holding foreign currency deposits with lock-in periods, two government sources said.

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The Reserve Bank of India (RBI) will amend regulations to prevent overseas transfers from being used to park money in time deposits or other inter-est-bearing accounts abroad.

"This is akin to passive wealth shifting, which is a red flag for the RBI in a still-controlled capital regime," source said.

The proposed changes reflect India’s cautious stance on a rise in outward remittances and full convertibility of the rupee, as authorities strive to safeguard foreign exchange reserves and manage currency volatility.