Dear Vinay/Praveen/Sunil Sir,
I think for the proposed transaction you also need to refer FEMA;
Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000
Borrowing in rupees by persons other than companies in India.
4. A person resident in India, not being a company incorporated in India, may borrow in rupees on non-repatriation basis from a non-resident Indian or a person of Indian origin resident outside India, subject to the following conditions :
(i) the amount of loan shall be received by way of inward remittance from outside India or out of Non-resident External (NRE)/Non-resident Ordinary (NRO)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Special Rupee (NRSR) account of the lender maintained with an authorised dealer or an authorised bank in India;
(ii) the period of loan shall not exceed three years;
(iii) the rate of interest on the loan shall not exceed two percentage points over the Bank rate prevailing on the date of availment of loan;
(iv) where the loan is made out of funds held in Non-resident Special Rupee (NRSR) account of the lender, payment of interest and repayment of loan shall be made by credit to that account; and in other cases, payment of interest and repayment of loan shall be made by credit to the lender’s Non-resident Ordinary (NRO) or Non-resident Special Rupee (NRSR) account as desired by the lender; and
(v) the amount borrowed shall not be allowed to be repatriated outside India.
However, you may note that for paying Interest/depositing/Remiting outside India you/your uncle needs to follow hectic procedure of Form 15CA/CB along with form A2 and other declaration u/s. 195 read with rule 37BB for every remittance and for obtaining/furnishing such info/documents attract procedural cost. By doing Cost-Benefit anlysis I think it is impractical to go for the transaction as your loan amount is not huge.
You may be attracted to this transaction coz of lower rate of interest but I bet that, if you are going for said transaction you will gonna loose more of your money.