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Net Worth & Solvency Glossary · Visa Finance
Blocked Accounts and Restricted Deposits in a Funds Proof
noun · a deposit that is paid in freely but drawn only in a fixed amount each month after arrival
Definition
A blocked account is a bank account in the destination country into which an applicant, usually a student, deposits a set sum for living costs before the visa is granted.
Once the student arrives, the holder can withdraw only a fixed amount each month. The balance proves living costs are covered without the money being spendable all at once.
Before and after the visa
- Before the visaThe set sum is paid inOpened and funded before the visa appointment
- After arrivalA fixed amount is released each monthThe rest stays blocked until its month comes
- Where
- A bank in the destination countryNot the applicant's own bank in India
- Who
- Usually a studentDecided by the visa route, not by how wealthy the applicant is
- Blocked
- Withdrawal, not depositMoney goes in freely; it comes out only at the monthly limit
- Amount
- Set by the destinationRevised from time to time; read from its official page when applying
Meaning
01How a blocked account works and who is asked to open one
The arrangement saves a visa office from having to judge whether a student will have money to live on, because the money is already there and cannot be spent early. Germany is the destination most widely known for it, and some other countries use comparable arrangements under different names. The destination sets the required amount and revises it from time to time. It is often set to cover a year of living costs rather than the whole course. The current amount is read from the destination's official page at the time of applying.
Who is asked to open one depends on the visa route, not on the applicant's wealth. A student on a route that requires a blocked account opens one however strong the family's finances are. Other evidence of wealth does not replace it.
Can money be deposited in a blocked account?
YesDrawing out
Blocked, except the monthly amount
What is blocked is withdrawal, not deposit: the holder draws only the permitted monthly amount after arrival.
Opening the account is a bank process, and it usually has to be complete before the visa appointment.
Two senses of "blocked"
Not the same thingIn a visa fileA blocked account
A separate account in the destination country, funded in advance, released to the holder in monthly instalments.
In everyday Indian bankingA "blocked amount"
"Blocked amount" or "funds are blocked" can also mean a hold placed on part of an ordinary account balance. That is a different thing, closer to a lien.
On a certified statement
02Whether a blocked balance belongs in your certified asset list
The money in a blocked account still belongs to the applicant. It has been moved, not spent, and it will be released to them in instalments.
Is it an asset?
It is an asset
The applicant still owns it. It has been moved to a restricted account, not spent, and it comes back in instalments.
Is it freely available?
It is not liquid
A statement that lists it among liquid holdings without saying it is blocked overstates what the applicant can reach.
The clear presentation
Three things the entry states, so the reader sees the balance and its restriction together
- 1Show the balanceThe sum standing in the blocked account at the date of the statement.
- 2Name it as blockedSo nobody reads it as cash the applicant can reach at will.
- 3State the monthly release limitThe fixed amount the holder can draw each month after arrival.
Count it once
The error to avoidWhere a net worth certificate for a visa file supports the same application as the blocked account, the error to avoid is showing the same money twice.
Shown once asThe blocked balance
The sum now sitting in the account in the destination country.
And again asThe Indian funds it came from
The same sum, still listed as if it were in the applicant's or sponsor's Indian accounts.
One sum, one line. Once the money has been transferred, it is the blocked balance and nothing else.
Two documents, two jobs
A blocked account does not replace a net worth certificateThe blocked account
Confirms the deposit and the restriction
It shows that the required sum is deposited and that it is restricted.
The certificate
Shows what the applicant or sponsor owns
Which is often how the source of that deposit is explained.
Moving the money
03Remitting from India into a blocked account: bank, TCS and paperwork touchpoints
Money sent from India into a blocked account goes through the Liberalised Remittance Scheme (LRS). Under the scheme, a resident individual may remit up to USD 250,000 per financial year, and studies abroad is a permitted purpose.
The bank's paperwork
The bank handling the transfer collects the declaration and supporting documents for the remittance.
Tax collected at source
Tax is collected at source on such remittances above a threshold, and the rate depends on the purpose and on whether the funds come from an education loan.
Under section 394 of the Income-tax Act, 2025, the bank collects tax on LRS remittances above Rs 10 lakh in aggregate: 2% where the purpose is education or medical treatment (from 1 April 2026) and 20% for other purposes. Nothing is collected where the amount remitted is an education loan from a financial institution.
Timing and cost
Branch requirements are often heavier than the scheme itself, and processing times vary. Starting the transfer before the account paperwork is complete is a common cause of a missed appointment.
Applicants who budget only for the deposit can be surprised by what the transfer itself costs.
Written by Subham Jhunjhunwala · Reviewed by CA Sundram Gupta
Sources: Reserve Bank of India, Master Direction on the Liberalised Remittance Scheme (rbi.org.in). This entry describes general practice. The destination country's official requirements govern each application.
Need help with a certificate that uses blocked account? See our Net Worth Certificate for Visa.A certified statement of what the applicant or sponsor owns, which is often how the source of a blocked deposit is explained.