What are borrowing and lending rules for NRI as per FEMA?
Loans to NRIs from Banks:
NRIs can avail loans from Indian banks against securities and immovable property (excluding agricultural land/plantations). Loans/overdrafts against NRO/NRE FDs are permitted but cannot be used for re-lending, agricultural activities, or real estate investment. There is no monetary ceiling on loan amounts.
Loans from Resident Individuals to NRIs:
A resident individual can lend up to USD 250,000 per financial year to an NRI relative under the LRS. The loan must be interest-free, have a minimum maturity of 1 year, and cannot be remitted outside India. For NRI accounts, it is essential to ensure compliance with the guidelines.
Loans from NRIs to Residents in Foreign Exchange:
A resident individual can borrow up to USD 250,000 from a close NRI relative. The loan must be interest-free, have a minimum maturity of 1 year, and be received via inward remittance or from the lender’s NRE/FCNR account.
Loans from NRIs to Residents in Rupees:
Residents can borrow from NRIs on a non-repatriation basis. The loan must be received via inward remittance or from the lender’s NRE/FCNR/NRO account. The loan term is capped at 3 years, with a maximum interest rate of 2% above the prevailing bank rate. Repayment, including interest, is credited to the lender’s NRO account, and the amount cannot be repatriated outside India.
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Loans to NRIs from Banks:
NRIs can avail loans from Indian banks against securities and immovable property (excluding agricultural land/plantations). Loans/overdrafts against NRO/NRE FDs are permitted but cannot be used for re-lending, agricultural activities, or real estate investment. There is no monetary ceiling on loan amounts.
Loans from Resident Individuals to NRIs:
A resident individual can lend up to USD 250,000 per financial year to an NRI relative under the LRS. The loan must be interest-free, have a minimum maturity of 1 year, and cannot be remitted outside India. For NRI accounts, it is essential to ensure compliance with the guidelines.
Loans from NRIs to Residents in Foreign Exchange:
A resident individual can borrow up to USD 250,000 from a close NRI relative. The loan must be interest-free, have a minimum maturity of 1 year, and be received via inward remittance or from the lender’s NRE/FCNR account.
Loans from NRIs to Residents in Rupees:
Residents can borrow from NRIs on a non-repatriation basis. The loan must be received via inward remittance or from the lender’s NRE/FCNR/NRO account. The loan term is capped at 3 years, with a maximum interest rate of 2% above the prevailing bank rate. Repayment, including interest, is credited to the lender’s NRO account, and the amount cannot be repatriated outside India.
Also Read: What is liberalised Remittance scheme as per FEMA?