RBI allows resident Indians to open dollar accounts in Gift City. What this means for you

livemint.com:

In a game-changer for frequent travellers and students studying abroad, the Reserve Bank has allowed resident Indians to open foreign currency accounts in Gujarat International Finance Tec-City, or Gift City.

Not only will this amount to significant savings when buying foreign currencies for overseas travel, it will also make spending towards fees or investments abroad a much smoother process.

That said, the money parked in Gift City foreign currency accounts can only be used for purposes permitted in the Liberalised Remittance Scheme. LRS allows resident Indians to remit funds abroad for specified purposes without any restrictions or approval from RBI.

Until now, such accounts were limited to investing in securities in Gift City and education-related payments, but RBI's decision, announced on Wednesday, has broadened the scope for remittances.

If you are a frequent traveller to foreign countries, buying foreign currencies in India can be expensive and cumbersome. Banks and other foreign exchange dealers charge huge spreads (5-10% for small amounts). It also means filling out a form each time and providing details such as passport number.

If you are able to hold the forex in a US dollar account in Gift City with an attached debit card, you can just transfer a bulk amount in one go. The amount will earn interest, and you can simply spend it whenever you go abroad.

The fact that the US dollar historically appreciates against the Indian rupee is a bonus point.

If you are a student or a parent, you can park the money in the Gift City account and remit it whenever needed for university or hostel fees and living expenses. This would also save you forex conversion charges (you are generally offered a better rate on a bulk