Under the Liberalised Remittance Scheme of the Reserve Bank of India, up to what maximum amount in United States dollars per financial year may an authorised dealer allow remittances by a resident individual for permitted current or capital account transactions or a combination of both?

Introduction / Context:
This question is from the area of foreign exchange management and banking awareness. The Liberalised Remittance Scheme, commonly called LRS, allows resident individuals to remit a limited amount of foreign exchange abroad every financial year for permitted capital and current account transactions, such as travel, education, investments and maintenance of relatives. Examinations often ask for the current ceiling on such remittances because it reflects policy on capital account liberalisation.

Given Data / Assumptions:

• The scheme in focus is the Liberalised Remittance Scheme of the Reserve Bank of India.
• The question asks for the maximum amount in United States dollars per financial year.
• The limit applies to resident individuals and covers both current and capital account transactions.
• Options provide four different ceiling values, ranging from 2,00,000 to 3,50,000 dollars.

Concept / Approach:
Under LRS, the Reserve Bank periodically reviews the per person annual limit. After upward revisions from earlier levels, the limit was fixed at USD 2,50,000 per financial year for a resident individual. This limit applies irrespective of the purpose, as long as the transaction is permitted under the foreign exchange rules. Therefore, among the given options, the correct ceiling is USD 2,50,000 and not the lower or higher values listed.

Step-by-Step Solution:
Step 1: Recall that LRS allows resident individuals to remit a defined amount of foreign exchange per year without seeking prior approval in most cases. Step 2: Remember that the current widely tested limit is two lakh fifty thousand United States dollars per individual per financial year. Step 3: Compare this figure with the four options provided. Step 4: Identify USD 2,50,000 as matching the remembered limit exactly. Step 5: Select USD 2,50,000 and reject the other values.

Verification / Alternative check:
An alternative check is to recall that earlier the limit had been USD 2,00,000 and was raised by USD 50,000 to reach the current threshold. This incremental change is frequently mentioned in banking awareness material. None of the official circulars mention a figure as high as USD 3,00,000 or USD 3,50,000 for the standard LRS limit, so these numbers are easily ruled out. This supports the selection of USD 2,50,000 as the correct ceiling.

Why Other Options Are Wrong:
USD 2,00,000 corresponds to an older limit before the upward revision and is now outdated for examination purposes. USD 3,00,000 and USD 3,50,000 are not standard LRS ceilings and appear only as distractors to test whether candidates know the correct updated figure. Selecting any of these would show that the candidate has either memorised an obsolete value or is guessing based on round numbers rather than relying on precise policy information.

Common Pitfalls:
Candidates sometimes remember only that the limit was increased and wrongly assume that it must have reached USD 3,00,000 or more. Others recall the earlier figure of USD 2,00,000 and do not realise that a revision has taken place. To avoid such mistakes, it is important to periodically check updated banking guidelines and to note both the earlier value and the new one with a simple memory tag, such as LRS now quarter million dollars per year.

Final Answer:
Under the Liberalised Remittance Scheme, a resident individual may remit up to USD 2,50,000 per financial year for permitted transactions.