The RBI said the bank has initiated corrective action and has applied for easing restrictions.

The Reserve Bank of India (RBI) partially eased restrictions on SBM Bank (India) Ltd on Wednesday, suspending all transactions under the Free Transfer Scheme (LRS).

The Central Bank reported that it had initiated corrective action and had submitted an application to ease restrictions.

According to a press release from the Reserve Bank, restrictions on SBMs allowing ATM/POS transactions at LRS via internationally valid KYC-compatible debit cards issued by the bank have been lifted.

Based on the submission and also to provide relief to the affected customers of the bank, it has been decided to partially relax the restrictions by allowing ATM/POS transactions under LRS through KYC compliant internationally active debit cards issued by the bank,” the RBI said in a release.

RBI eases until March 15, 2023, or until new orders, whichever comes first, the statement added. Initially, the action was taken based on several significant supervisory issues observed at the bank.

Under the Free Remittance Program, all residents, including minors, are allowed to freely deposit up to $250,000 per fiscal year, according to the RBI. The original plan was introduced on February 4, 2004, with a limit of $25,000. 

The LRS limit was subsequently revised from time to time following prevailing micro and macroeconomic conditions.