India's largest non-state bank HDFC has issued a customer alert this week, explicitly stating that capital account transactions outside India are not permitted using HDFC cards. According to reports from The Economic Times, the bank has unambiguously warned customers to refrain from swiping credit, debit, and forex cards for international transactions including buying stocks, floating companies, and owning properties abroad. The alert covers opening offshore bank accounts as well, which are also classified under such transactions. The bank, in a customer mailer this week, has stated "as per regulatory guidelines capital account transactions outside India are not permitted" using HDFC cards.
The bank's alert comes amid growing concerns about resident individuals using cards for international capital account transactions without proper authorization. As reported by The Economic Times, many individuals have been conducting such transactions oblivious that they were violating foreign exchange and banking rules. Some customers may have acted consciously to dodge the tax collected at source (TCS) or sidestep restrictions on overseas forex remittance. The bank's action highlights the increasing use of credit cards for international financial activities that fall outside regulatory guidelines, with many resident individuals banking with various financial institutions using cards for such transactions.
The regulatory concerns have already resulted in enforcement actions against individuals who used credit cards for international transactions. According to The Economic Times, several individuals who had used credit cards for making the initial deposit for Dubai property deals have been recently questioned by the Enforcement Directorate. This demonstrates the serious nature of violations and the authorities' commitment to enforcing foreign exchange regulations, particularly regarding real estate transactions involving overseas properties. The enforcement actions underscore the authorities' focus on individuals who have used credit cards to circumvent proper channels for international financial activities.
