In a short press release on its website the RBI said that the action against the bank “is based on certain material supervisory concerns observed in the bank,” without giving any details. It is unclear as to what instances triggered the RBI action, tough Mauritius’ status as a tax haven has always invoked suspicion on outflows to the country. SBM Bank officials did not immediately respond to calls for comment.
According to the LRS scheme which was first introduced in 2004, all resident Indian individuals, are allowed to freely remit up to $250,000 per financial year for any transaction abroad. The transfer limits have been hiked in phases starting with an initial limit of $25,000. Latest data shows that Indians remitted close to $2 billion in November, half of it for international travel. Other reasons for the money transfer included, maintenance of close relatives, gifts and overseas education. So far this fiscal, Indians have remitted around $17.28 billion in outward remittances.