Banking · FEMA and LRS
Mr. Aditya, a Resident Indian and a software engineer, intends to acquire 1,000 shares of a publicly listed US technology company and also open a savings account in the USA to facilitate the trading and dividend receipts. The shares are valued at USD 200 each on 15 May 2025. He does not have any relatives abroad. Which of the following statements correctly identifies the capital account transaction involved, the governing scheme that permits this transaction, and the primary regulatory reason for allowing a savings account abroad in this context?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Capital Account Transaction: Opening a bank account; Governing Scheme: LRS; Primary Regulatory Reason: To facilitate remittances for educational expenses.
- 2Capital Account Transaction: Acquiring shares; Governing Scheme: Liberalised Remittance Scheme (LRS); Primary Regulatory Reason: To facilitate investment and receipt of related income.✓
- 3Capital Account Transaction: Acquiring shares; Governing Scheme: FEMA Current Account Rules; Primary Regulatory Reason: To manage personal expenses abroad.
- 4Capital Account Transaction: Opening a bank account; Governing Scheme: RFC Scheme; Primary Regulatory Reason: To permit holding of foreign dividends.
Correct answer
Capital Account Transaction: Acquiring shares; Governing Scheme: Liberalised Remittance Scheme (LRS); Primary Regulatory Reason: To facilitate investment and receipt of related income.
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