The report "RBI lens on outward remittances" (October 25) reveals with the help of statistics that there has been a sudden spurt in outward remittances of foreign currencies by resident Indians during July and August this year. While one reason for this trend could be the beginning of new academic sessions abroad, the Reserve Bank of India (RBI) is leaving no stone unturned to ascertain the facts.
Incidentally, the shares of various other identified components of the Liberalised Remittance Scheme (LRS) for resident individuals such as remittances for the maintenance of close relatives, gifts, donations, travel, purchase of immovable properties and medical treatment, too, have risen significantly during the same period.
In February this year, the ceiling for foreign remittances by resident Indians under the LRS was increased from $125,000 to $250,00 a year by the RBI. No wonder outward remittances worth $380 million were effected in July this year compared to $90.2 million in the same month last year - more than a fourfold rise.
The RBI's concern seems well-reasoned, more so in the light of the Rs 6,000-crore Bank of Baroda scam, which has shaken the country's banking sector and the finance ministry, and is being investigated by the Central Bureau of Investigation and the Enforcement Directorate.
Thus proper monitoring of the end-use of all outward foreign remittances to prevent their misuse is all the more necessary. In fact, the banks facilitating such remittances should have an in-built mechanism to prevent their ill-intended diversion.
Additionally, anyone seeking to remit money must submit an undertaking in advance - supported by two witnesses acceptable to the bank - and later, within a specific time-period, produce requisite documentary evidence of having made proper use of it.
S Kumar, New Delhi
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