The Reserve Bank of India (rbi) has directed SBM Bank (India) to stop all transactions under Liberalised Remittance Scheme (LRS) till further orders. SBM Bank (India) commenced operations on 1st December 2018 as the 1st universal bank in the country to receive a banking license from the Reserve Bank of India (RBI) through the Wholly Owned Subsidiary (WOS) route.
Vested Finance has issued an official communication on this development. Vested Finance’s cost-effective instant funding product Vested Direct is powered by SBM India. As a result, Vested Finance will pause processing fresh deposits via Vested Direct. In the meantime, Vested users can use their existing bank accounts to deposit USD into their Vested brokerage accounts. Vested Finance team is working towards enabling other easy deposit options via Vested Direct.
Vested Finance team says, “However, the introduction of this ruling means we will not be processing any new deposits using Vested Direct in the interim. Our banking partners believe that it is a matter of time before they can start processing remittances again and that all remittances made through our processes till now have been compliant with the appropriate regulations. We are working hard to provide another low-cost and digital deposit solution on the Vested platform. We will keep you posted on any new updates as soon as we receive them.”
As per Vested, one can continue buying and selling stocks as usual. One can deposit funds using LRS remittance options provided via netbanking by their existing banks. Both the existing Vested Direct-SBM account and your Vested Brokerage account are secure. The only impact on an investor is that instead of using our low-cost and unique fund transfer solution, Vested Direct, one will need to use your existing bank accounts to load funds. There is no impact on your US stock holdings. They are held securely in one’s US brokerage account with DriveWealth. Only the transfer of fresh funds to the US brokerage account via Vested Direct-SBM account is paused. One will still be able to place trades as earlier.
The RBI’s Liberalized Remittance Scheme (LRS) refers to the annual remittances that a resident person is permitted to send. Currently, under the LRS rules, any resident individual including a minor is allowed to remit up to 2.5 lakh US dollars (USD 2,50,000 ) in each financial year.