Offshore banks are reportedly reviewing international credit cards issued to some wealthy Indians living in India. This news raises questions over whether similar restrictions could affect Indians based in the UAE. The key issue is India’s foreign-exchange rules on money remitted abroad by residents.
Banks in Zurich, Singapore, London and parts of West Asia are reportedly reassessing cards linked to offshore accounts, the Economic Times reported. The concern centers on India’s requirement that certain foreign exchange acquired by residents be used for permitted purposes or surrendered within the prescribed period.
For UAE-based NRIs, the position is different. Under the Foreign Exchange Management Act (FEMA), the rules apply to a resident of India. An Indian citizen living and working in the UAE generally falls outside that category when they qualify as a person resident outside India under FEMA.
The Liberalised Remittance Scheme (LRS) allows resident individuals to remit up to US$250,000 in a financial year for permitted current and capital account transactions. These can include overseas investments, property purchases, education, medical treatment and travel.
RBI rules also provide an 180-day period for residents to surrender certain unspent or unused foreign exchange to an authorized person. The requirement is directed at resident individuals and should not be treated as a general deadline for all Indians holding money overseas. That distinction is important for UAE-based NRIs. Their UAE salary, business income and savings are not automatically treated as LRS funds simply because they hold Indian passports.
An NRI living and working in the UAE can generally retain legitimate foreign earnings in UAE bank accounts. The 180-day LRS requirement does not force such a person to invest those earnings or transfer them to India. The position can change if the individual later becomes a resident of India. FEMA’s definition considers residence and the purpose or intention behind a person’s stay, rather than treating nationality alone as the deciding factor.
Returning to India also does not automatically mean that assets lawfully acquired while living abroad must be sold. However, fresh foreign-exchange transactions made after becoming resident can fall under the rules applicable to residents.
Non-Resident Ordinary (NRO) accounts are another area that should not be confused with LRS. RBI rules allow NRIs to remit up to US$1 million per financial year from eligible NRO balances and asset-sale proceeds, subject to applicable conditions and taxes. This facility is separate from the US $250,000 LRS limit for resident individuals.
An NRI’s transfer from an NRO account should therefore not automatically be treated as an LRS transaction. Banks may still require documents confirming the source of funds, tax compliance, and other prescribed requirements.
International credit cards linked to offshore accounts can allow customers to spend directly against foreign-currency balances. For banks, the regulatory question arises when the account holder is a resident Indian who has moved money abroad under LRS.
The reported concern is therefore about the status and use of funds held overseas. It does not mean UAE banks are generally barred from issuing credit cards to Indian citizens who live and work in the Emirates.
Indian nationality does not by itself make UAE earnings subject to the 180-day LRS requirement. For UAE-based NRIs, the important question is their FEMA residency status and the source of the funds.
The LRS framework becomes relevant when a person resident in India sends foreign exchange abroad under the scheme. So, the reported banking concerns for resident Indians do not generally apply to Indians earning and saving money in the UAE.
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