Dubai: Reports that some overseas banks are reviewing or restricting international credit cards linked to offshore accounts of wealthy Indian residents have drawn attention to India’s foreign-exchange rules. For Indians living and working in the UAE, however, the key question is whether the same rules apply to their UAE salaries and savings.

The answer, in most cases, is no.

The 180-day requirement applies to a “person resident in India” under the Foreign Exchange Management Act (FEMA). It does not generally apply to income earned by a person who is legally resident outside India and retained overseas.

What is the 180-day rule?

Under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), a resident individual can remit up to $250,000 in a financial year for permitted purposes, including overseas education, medical treatment, travel, investments and property.

Foreign exchange acquired by an Indian resident but left unused generally has to be surrendered or repatriated within 180 days.

For example, if a resident Indian sends money overseas to purchase shares but the transaction does not take place, the funds cannot ordinarily remain abroad indefinitely as idle cash. The applicable rules may require the unused amount to be brought back within the prescribed period.

The rule has reportedly prompted some international banks to reassess accounts and credit cards connected to resident Indians, particularly where customers need to maintain substantial offshore balances.

Does it apply to UAE salaries?

Generally, no.

An Indian citizen who qualifies as a person resident outside India under FEMA can retain salary, business income and savings earned in the UAE in UAE bank accounts. The money does not become an LRS remittance simply because the person holds an Indian passport.

The same distinction is important for children of NRIs living in the UAE. Indian citizenship alone does not make their UAE income subject to LRS.

What about NRO transfers?

LRS should not be confused with the rules governing Non-Resident Ordinary (NRO) accounts.

The RBI generally permits NRIs to remit up to $1 million per financial year from eligible NRO balances and certain asset-sale proceeds, subject to applicable taxes, documentation and banking requirements.

This is a separate facility from the $250,000 LRS limit applicable to resident individuals. The 180-day LRS deployment requirement should therefore not automatically be applied to every NRO remittance.

Banks may, however, ask for documents establishing the source of funds and compliance with Indian tax requirements.

What if an NRI returns to India?

This is where the rules can change.

FEMA residency is not determined simply by counting the number of days spent in India. The purpose of the person’s stay and intention regarding residence are also relevant.

Once an NRI becomes a resident under FEMA, their Indian bank accounts generally have to be redesignated as required under the regulations. Fresh money sent from India for overseas investments would then be governed by the rules applicable to residents, including the LRS framework.

However, assets such as foreign currency, overseas investments and property legally acquired while the person was a non-resident can generally continue to be held abroad, subject to the applicable FEMA rules.

For UAE-based NRIs, therefore, residency status—not Indian nationality—is the crucial factor. UAE-earned income and legitimately held overseas savings do not automatically face a six-month deadline merely because the account holder is an Indian citizen.