Borrowing and Lending
Borrowing by an NRI from Resident:

A NRI is permitted to avail loan from a Bank in India subject to terms and conditions specified by RBI. Banks can grant loans to NRIs on the security of shares and other securities and immovable property (other than agricultural land / plantation property / farm house).

NRIs can freely avail loan / overdraft against their NRO / NRE FDs in India. However, such loan / overdraft cannot be utilized for the purposes of relending, carrying on agricultural / plantation activities or for investment in real estate business.There is no restriction on the monetary ceiling of the loan amount.

A resident individual can lend money within the overall limit of USD 2,50,000 per financial year under LRS to an NRI relative. The loan should be interest free and have a maturity of minimum 1 year and cannot be remitted outside India.

Borrowing by an individual Resident from NRI in foreign exchange:

An individual resident can borrow upto USD 2,50,000/- from his close relatives outside India.subject to the following conditions:

  • The minimum maturity period of the loan is one year.
  • The loan is free of interest and
  • The amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR account of the non-resident lender
    
Borrowing by an individual Resident from NRI in Rupees:

A person resident in India (other than an Indian company) may borrow on non-repatriation basis from an NRI or a PIO outside India subject to following:

  • Amount of loan shall be received by inward remittance from outside India or out of NRE/FCNR/NRO account of the lender in India.
  • The period of loan shall not exceed 3 years
  • Rate of interest shall not exceed 2 % points over the Bank rate prevailing on the date of loan
  • Repayment for interest and repayment of loan shall be made credit to the lender’s NRO account.
  • Amount borrowed shall not be allowed to be repatriated outside India