In plain words: can a resident Indian keep a foreign bank account, own foreign shares, or hold foreign currency? Yes — within limits. Here is the line between allowed and not.
Foreign investments via LRS
Under the LRS, a resident can buy and hold foreign shares, bonds and deposits, and even property, up to USD 250,000 per year. Assets so acquired can be held abroad; their income should be handled as the rules require.
Foreign bank accounts
- A resident can open and maintain a foreign account for LRS-permitted purposes (for example, to make overseas investments or during travel/stay abroad).
- Accounts opened while you were a non-resident, or holding inherited funds, can generally be retained.
- Unexplained foreign accounts outside the permitted routes are a red flag.
Holding foreign currency
Residents can hold limited foreign currency (for example, unspent travel exchange up to a ceiling, or in an RFC/EEFC account where eligible). Beyond that, foreign currency should be sold to an AD bank within the prescribed time.
What is not allowed
- Holding undisclosed foreign assets or accounts — this attracts the Black Money Act and FEMA action.
- Routing money through hawala or informal channels.
- Exceeding LRS to build foreign assets.
The two rules that keep you safe
- Use banking channels and the LRS for anything you build abroad.
- Declare foreign assets and income in your tax return.
Frequently asked questions
Can I own US stocks as a resident Indian? Yes — via LRS, within the annual limit.
Can I keep a foreign bank account? For permitted purposes, or if opened as a non-resident/inherited — yes, with disclosure.
What if I never declared a foreign account? That is serious — take advice promptly; the Black Money Act can apply.
How Vakil Help Desk helps
Vakil Help Desk advises on FEMA compliance, remittances, NRI matters, foreign investment and compounding — and represents clients in ED FEMA proceedings. If you have a cross-border transaction or a FEMA notice, we can help you get it right.
This article is for general legal awareness, not individual legal advice. FEMA rules, limits and forms are revised by the RBI and the Government from time to time, and the right treatment depends on your facts and the current position. Please consult a professional before acting on a cross-border transaction.