In Indian foreign exchange regulations, LRS is a facility provided by the Reserve Bank of India that allows resident individuals to remit a specified amount in US dollars every financial year. Here, the abbreviation ‘‘LRS’’ stands for which of the following?

Introduction / Context:
This question falls under banking and foreign exchange regulations in India. The Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of foreign currency abroad each financial year under a specific facility known as LRS. Understanding the full form of LRS and its basic purpose is important for exams related to banking, finance, and general awareness because it connects to topics such as external investments, education abroad, travel, and liberalisation of capital flows.

Given Data / Assumptions:
We are told that LRS is a facility for resident individuals to remit a certain US dollar amount every year for permitted current or capital account transactions. The options for the full form of LRS are:

• Liquidity Remittance Scheme
• Liberalised Remittance Scheme
• Liberalised Remittance Source
• Liberalised Revenue Scheme

It is assumed that the learner has at least heard of LRS in connection with sending money abroad for purposes like education, travel, or investment.

Concept / Approach:
LRS officially stands for Liberalised Remittance Scheme. Under this scheme, resident individuals can remit up to a specified limit each financial year (the exact cap can change over time) for purposes such as education, travel, maintenance of relatives, medical treatment, and permitted investments abroad. The key word in the abbreviation is “Liberalised,” reflecting the relaxation of earlier strict controls. The other option expansions are not used in RBI's official terminology and are distractors that sound similar but are incorrect.

Step-by-Step Solution:
Step 1: Recall that LRS relates to outward remittances by resident individuals under RBI guidelines. Step 2: Remember seeing the phrase Liberalised Remittance Scheme in RBI circulars, bank documents, or exam study material. Step 3: Look at each option and identify which one matches that remembered phrase exactly. Step 4: Confirm that the word Scheme appears in the correct expansion and that the term highlights liberalisation of remittance rules. Step 5: Choose Liberalised Remittance Scheme as the correct full form of LRS.

Verification / Alternative check:
Verification comes from recalling that banks often give LRS related forms or declarations titled “Liberalised Remittance Scheme (LRS) Application.” Official RBI documents and FAQs unmistakably expand LRS as Liberalised Remittance Scheme. None of the other suggested expansions—Liquidity Remittance Scheme, Liberalised Remittance Source, or Liberalised Revenue Scheme—appear in such documents. The consistency of usage across RBI press releases, bank websites, and coaching material confirms that Liberalised Remittance Scheme is correct.

Why Other Options Are Wrong:
Liquidity Remittance Scheme: This phrase is not used by RBI and does not accurately describe the nature of the facility.

Liberalised Remittance Source: The word “Source” does not fit the context; LRS is about a scheme, not a source.

Liberalised Revenue Scheme: This incorrectly suggests something related to government revenue rather than individual outward remittances.

Common Pitfalls:
Some candidates may be distracted by the word Liquidity or Revenue because these are common in finance, or they may misremember the second word as Revenue instead of Remittance. To avoid such errors, link LRS mentally with the purpose: remitting money abroad under liberalised rules. The word Scheme is also important because LRS is a defined scheme under FEMA and RBI regulations, not just a concept or source of funds.

Final Answer:
In RBI's foreign exchange framework, LRS stands for Liberalised Remittance Scheme.