For years, international credit cards issued by offshore banks were considered a premium financial tool for wealthy Indians who travelled frequently, maintained overseas investments or spent significant amounts abroad.

These cards often offered attractive features such as spending in foreign currencies, avoiding some currency-conversion costs and access to international banking relationships.

But that landscape is changing.

Several offshore banks in financial centres including Zurich, Singapore, London and parts of West Asia are reportedly becoming more cautious about issuing or renewing international credit cards for wealthy Indians who are residents of India. The issue is not necessarily the customers’ creditworthiness. Instead, it is increasingly linked to India’s rules governing how residents deploy money transferred overseas.

Why are global banks pulling back?

At the centre of the issue is India’s Liberalised Remittance Scheme (LRS) and a requirement concerning funds transferred abroad.

Under the framework, resident individuals can remit up to $250,000 per financial year for permitted purposes. However, money transferred under LRS cannot simply remain unused in an overseas bank account indefinitely.

According to the Economic Times report, regulations require unutilized funds to be redeployed within 180 days or brought back to India. Simply leaving the money sitting in a foreign savings or current account, or in a fixed deposit, does not generally qualify as deployment.

This creates an operational problem for some international banks.

If a wealthy Indian resident maintains an overseas account primarily to support an international credit card, the bank may have concerns about whether the underlying funds can remain there in the way required to support the banking relationship.

As a result, some institutions are reportedly becoming reluctant to renew existing cards or issue new ones.

What made these cards attractive?

International credit cards have traditionally offered a number of advantages to affluent customers.

For someone who regularly spends overseas, paying directly in the relevant foreign currency can simplify transactions and potentially reduce currency-conversion costs.

Some offshore cards have also offered very high or flexible spending limits, making them attractive to high-net-worth individuals with substantial international expenses.

They could be particularly convenient for spending on:

• International travel
• Hotels and luxury accommodation
• Overseas shopping
• Education expenses
• Business travel
• International dining
• Other permitted overseas transactions

For customers who already had legitimate overseas financial arrangements, having a card connected to those accounts could make international spending considerably easier.

The regulatory problem goes beyond credit cards

The issue is not really about whether credit cards themselves are illegal.

Indian regulations recognise the use of international credit cards, but the interaction between overseas accounts, LRS transfers and card settlement can create compliance questions.

Legal and tax experts cited by the Economic Times said the 180-day deployment requirement is creating difficulties for some Indian families maintaining overseas banking relationships.

This is particularly relevant for customers who maintain significant balances abroad.

A bank may want to ensure that the account structure and underlying funds comply with the applicable regulations. If that becomes difficult to establish, the bank may prefer not to continue providing certain services.

Why wealthy Indians are particularly affected

For ordinary international travellers, an offshore credit card may not be necessary.

Indian banks already offer numerous cards designed for international spending, including premium products with airport lounge access, travel rewards and other benefits.

The problem becomes more significant for wealthy individuals who have complex international financial arrangements.

A customer may have overseas investments, foreign property, family members studying abroad and multiple international banking relationships.

Maintaining these structures requires careful compliance with India’s Foreign Exchange Management Act (FEMA) and related rules.

The increased scrutiny means that international banks may be more cautious about customers who are Indian residents but maintain significant financial relationships outside the country.

Minor account holders face an additional challenge

The issue can become even more complicated when minors are involved.

Under LRS rules, minors can also be eligible for remittances, but they may have fewer practical ways to deploy those funds independently.

Legal experts cited by the Economic Times said overseas banks are increasingly questioning the continuation of some such accounts because of the difficulties surrounding investment and deployment of funds by minor account holders.

This has created an unusual situation for wealthy families that previously used overseas accounts and cards as part of broader financial arrangements.

Is this happening across all foreign banks?

Not necessarily.

The broader Indian credit-card market remains highly competitive, and foreign banks are still active in the country.

Separate RBI data reported by the Economic Times earlier this year showed that several foreign banks had reduced their active card base during 2025, even while India’s overall credit-card market continued to expand. American Express and DBS Bank India, for example, recorded declines, while HSBC and SBM Bank India increased their card numbers.

This suggests that the story is more nuanced than simply saying foreign banks are abandoning India’s credit-card market.

The current issue involving offshore cards is primarily about cross-border banking arrangements and regulatory compliance, rather than a complete withdrawal from credit-card services.

What does this mean for Indian consumers?

For wealthy Indians who rely on international credit cards, the development could mean greater scrutiny and fewer options.

Customers may increasingly need to demonstrate that their overseas accounts, investments and remittances comply with Indian regulations.

It also highlights the importance of understanding the difference between maintaining an overseas banking relationship and simply keeping money abroad without a permitted purpose.

For most consumers, domestic premium cards may remain the simpler option for international spending.

The bigger picture

India has steadily strengthened its monitoring of cross-border financial flows, with the objective of improving transparency and ensuring that overseas money transfers comply with foreign-exchange and tax rules.

For global banks, this creates a balancing act.

They want to serve wealthy international customers, but they also need to ensure that their products do not create regulatory or compliance risks.

The result could be a gradual shift away from the relatively flexible offshore credit-card arrangements that once appealed to India’s wealthiest consumers.

For customers, the message is straightforward: international banking convenience increasingly comes with greater regulatory responsibility.

As India’s financial system becomes more closely connected with global markets, wealthy residents will need to pay greater attention to how overseas accounts, remittances, investments and credit facilities interact with Indian regulations.

Disclaimer

This article is intended for general informational and educational purposes only. Rules concerning foreign exchange, overseas remittances, taxation and international credit cards can change and may depend on an individual’s residency status, account structure and transaction purpose. Readers should consult the Reserve Bank of India, a qualified tax professional or a FEMA specialist before making decisions involving overseas accounts or remittances.

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