Several offshore banks in financial centres such as Zurich, Singapore, London and parts of West Asia are reportedly becoming reluctant to issue or renew international credit cards for wealthy Indian customers. The issue is reportedly linked not to the customers' creditworthiness but to India's foreign exchange regulations. Under the Liberalised Remittance Scheme, resident Indians can remit up to $250,000 a year for permitted purposes, subject to specific conditions governing how the money is used overseas.

One key requirement is the stipulated 180-day deployment period for funds remitted under the LRS. Money transferred abroad must be spent or invested within the prescribed period, while unused funds are generally required to be brought back to India. Simply retaining the money in an overseas savings or current account, or placing it in a fixed deposit, does not qualify as deployment. This restriction has reportedly created complications for foreign banks offering cards linked to overseas accounts held by Indian residents.

The issue becomes particularly relevant when such cards expire and come up for renewal. Foreign banks may be reluctant to continue providing card facilities to Indian residents who have limited flexibility to maintain large idle balances overseas. For travellers, however, there are several ways to manage international spending while keeping currency conversion costs under control. Travellers should examine forex markups, cross-currency charges and ATM withdrawal fees before choosing a card or payment method.

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One option for planned international trips is a prepaid forex card, which allows travellers to load money before leaving India and, depending on the product, potentially lock in an exchange rate. Deepesh Varma, Chief Business Officer for Foreign Exchange at Thomas Cook (India), said prepaid forex cards can be cost-effective for travellers who know their approximate spending requirements. He advised customers to examine the complete fee structure rather than focusing only on the advertised exchange rate, as additional charges can affect the overall cost.

For frequent international travellers, credit or debit cards offering low or zero forex markup can also be useful. However, customers should check the terms for cross-currency charges, ATM fees, annual fees and other costs. Mobile wallets and tap-and-pay services can make overseas payments convenient, but they do not necessarily remove forex charges because the underlying card may still impose them. Travellers should therefore check which card is connected to their mobile payment service and what fees it carries.

Pavan Kavad, Managing Director of Prithvi Exchange, advised travellers to plan their foreign exchange requirements in advance rather than relying entirely on last-minute currency exchanges, where unfavourable rates and convenience fees can increase costs. He recommended comparing exchange rates, markups and transaction charges and carrying a combination of cash and forex cards for different expenses. Travellers should also avoid repeated low-value currency conversions, as accumulated fees and unfavourable rates can significantly increase the overall cost of an overseas trip.

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