Mumbai: Encouraged by foreign exchange reserves touching record levels, the Reserve Bank on Tuesday doubled the annual overseas investment ceiling for individuals to USD 2,50,000.

"On a review of the external sector outlook and as a further exercise in macro-prudential management, it has been decided to enhance the limit under the Liberalised Remittance Scheme (LRS) to USD 2,50,000 per person per year," the RBI said in its Bi-Monthly Monetary Policy Statement.

In view of the worsening current account deficit and a volatile rupee, the RBI had in August 2013 reduced the ceiling from USD 200,000 to USD 75,000 per person in a year under the LRS. Consequently, with improvement in forex situation, it was raised to USD 1,25,000 in June 2014.

The LRS allows residents to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI.

In mid-January, India's foreign exchange reserves touched a new life-time high at USD 322.135 billion, driven by higher foreign fund inflows and lower forex outgo on the back of a massive fall in global crude prices.

Foreign funds had been pumping more and more dollars into Indian equities ever since the new government assumed charge in May.

In 2014, FIIs pumped in USD 16.15 billion into Indian equities while they have exhausted the cap of USD 30 billion in Government securities. They have parked USD 32.5 billion in corporate bonds, which is 64 percent of their cap of USD 51 billion.

Foreign direct investments (FDI) in the country rose by 22 percent to USD 18.88 billion during the eight months of the current fiscal. The amount was USD 15.45 billion in the April-November period of 2013-14.

India's current account deficit narrowed to 1.9 percent of GDP in the first half of current fiscal from 3.1 percent of GDP in in the corresponding period of 2013-14.

(PTI)