Loans from Non-resident Relatives
10D.8 Persons (i.e., individuals) resident in India can avail of interest
free loans on non-repatriation basis from their non-resident relatives for
personal purposes and business activities and not for the purpose of carrying
on agricultural/plantation activities, purchase of immovable property, shares,
debentures, bonds or for re-lending. Under the general permission granted
by Reserve Bank vide its Notification No. FERA.175/97-RB dated 27th February
1997, such loans can be availed of subject to the following conditions:
(a) The loans should be from the relatives
as defined in Section 6 of the Companies Act, 1956.
(b) The loan amount should be received through normal banking channels or
by debit to the lender's NRE/FCNR account with an authorised dealer.
(c) The repayment of loan amount is made by credit to the Ordinary Non-resident
Rupee (NRO) account of the non-resident lender.
Applications for availing of
loans from non-resident relatives on non-repartiation basis but which do not
fall within the above criteria or loans on repatriation basis, should be referred
to Reserve Bank for prior approval giving full details such as name/address
of lender, loan amount, rate of interest, purpose and period of the loan repayment