Can I take Loan From Foreign Friend?

909 views

Save Share

Subhadeep G.

33 Points Posted on 21 February 2021

I have a old friend in Europe who is willing to give me loan for 5 years for personal purpose. Is it allowed? What will be tax implications?

Replies (8)

Quick Summary

Yes, you can generally take a loan from a foreign friend under the FEMA Act, but there are specific rules to follow. The loan must be on a non-repatriation basis and the repayment of principal and interest can only be made to the lender's NRO account in India. Additionally, the loan period cannot exceed 3 years, and the interest rate is capped at 2% above the prevailing Bank Rate.

My Elite Space

28 Points Posted on 21 February 2021

Yes, you are allowed to take loan in accordance with FEMA ACT.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 21 February 2021

Yes you are eligible as per procedure followed by FEMA act

dipen thakkar

CA CS LLB

30 Points Posted on 21 February 2021

Yes you are eligible for the loan

Kapadia Pravin

10683 Points Posted on 22 February 2021

Yes subject to RBI rules

anil jain

Partner

855 Points Posted on 22 February 2021

Pl explain the rules to be followed.

Josh

Manager

104 Points Posted on 23 February 2021

FEMA (Borrowing and Lending) Regulations, 2018 and RBI Master Direction - Borrowing and Lending transactions in Indian Rupee (INR) between Persons Resident in India and Non-Resident Indians / Persons of Indian Origin should help

anil jain

Partner

855 Points Posted on 23 February 2021

2.1.1 Borrowing in INR by persons other than companies in India: A person resident in India, not being a company incorporated in India, may borrow in INR from NRIs/PIOs after satisfying the following terms and conditions:

Borrowing shall be only on a non-repatriation basis;
The amount of loan should be received either by inward remittance from outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the lender, maintained with an authorised dealer or an authorised bank in India;
Period of loan shall not exceed 3 years;
Rate of interest on the loan shall not be more than two per cent above Bank Rate prevailing on the date of availment of loan;
Payment of interest and repayment of principal shall be made only to the NRO account of the lender.

anil jain

Partner

855 Points Posted on 23 February 2021

Borrowing shall be only on a non-repatriation basis;
The amount of loan should be received either by inward remittance from outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the lender, maintained with an authorised dealer or an authorised bank in India;
Period of loan shall not exceed 3 years;
Rate of interest on the loan shall not be more than two per cent above Bank Rate prevailing on the date of availment of loan;
Payment of interest and repayment of principal shall be made only to the NRO account of the lender.