Why is it illegal to take Indian currency, the rupee, out of India?

Asked 08-Mar-2018
Updated 01-May-2023
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Why is it illegal to take Indian currency, the rupee, out of India?



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It is not illegal to take Indian currency, the rupee, out of India per se, but there are certain restrictions and regulations governing the amount of rupees that can be taken out of the country. These restrictions are in place to maintain the stability of the Indian economy and prevent illegal activities such as money laundering and smuggling.

Why is it illegal to take Indian currency the rupee out of India

The Reserve Bank of India (RBI) is the central bank of India and is responsible for formulating and implementing the country's monetary policy. The RBI regulates the movement of currency into and out of the country, including the export of Indian currency by travelers.

According to RBI regulations, any person traveling abroad can take up to Rs. 25,000 in Indian currency out of the country. However, if a person wishes to take more than Rs. 25,000 out of the country, they must obtain prior permission from the RBI. This is known as the Foreign Exchange Management Act (FEMA) and is aimed at preventing the illegal export of currency.

The restrictions on the export of Indian currency are necessary to maintain the stability of the Indian economy. If a large amount of currency is taken out of the country, it can lead to a shortage of rupees, which can cause inflation and a decline in the value of the currency. Additionally, it can make it difficult for businesses and individuals within the country to obtain the currency they need for transactions, which can have a negative impact on the economy as a whole.

Another reason for the restrictions on the export of Indian currency is to prevent illegal activities such as money laundering and smuggling. Criminals and terrorists often use currency smuggling to move money across borders without detection. The restrictions on the export of Indian currency make it more difficult for these activities to occur and help to ensure the security of the country.

In summary, it is not illegal to take Indian currency, the rupee, out of India, but there are restrictions in place to prevent the illegal export of currency and maintain the stability of the Indian economy. Anyone wishing to take more than Rs. 25,000 out of the country must obtain prior permission from the RBI, and failure to comply with these regulations can result in penalties and legal consequences.