In a surprise move, the Reserve Bank of India, RBI bans SBM Bank from LRS remittance transactions and instructed to stop it immediately. The action was taken by the central bank under sections 35A and 36(1)(a) of the Banking Regulation Act, 1949,and directed SBM Bank to stop Liberalized Remittance Scheme (LRS) with immediate effect till further notice. SBM Bank is a subsidiary of Mauritius-based SBM Holdings. It started its operations on 1 December 2018.
Earlier also, the RBI has put penalty on SBM Bank (India) for non-compliance of regulatory norms by SBM Bank (Mauritius), in November 2018. Also Read – Moody’s Upgrades Credit Rating of Canara Bank, PNB & BOB
As reported the penalty has been imposed for non-compliance by SBM Bank (Mauritius) with certain provisions of directions issued by the Reserve bank of India on ‘Time-bound implementation and strengthening of SWIFT – related operational controls’ and ‘Cyber Security Framework in Banks’, the Reserve Bank of India (RBI) said in a statement.
What is LRS Scheme ?
Under the LRS scheme, all resident individuals, including minors, are allowed to freely remit funds abroad up to $ 2,50,000 per financial year. The Scheme was introduced on February 4, 2004, with a limit of USD 25,000.
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