Loan from director

Hello Vipul,

In your case there is foreign direct investment and you have to check whether the amount is such that which attract approval rout or not if yes you should have follow proceedure as laid down in fema and rules made thereunder. RBI isseues Master circular for that behalf every year on 1st july you can found it on net find master circular and verify.

If there is no need to approval than the AD I bank of your director have to intimate RBI about such transaction and no need for approval only intimation will reqier.

Thanks

I think it will be hit by ECB. ECB norms under FEMA will have to be complied with

Hi,

RBI’s ECB Guidelines has specifically provided ECB procedure, it’s terms and conditions, eligible lenders, maturity etc.

I have gone through the list of eligible lenders. The name of director of the company is not there. However an equity share holder can provide ECB provided minimum holding requirement should be complied with.

Therefore, I have doubt about legality of this types of loan(if the director is not equity holder as above). Better take RBI’s opinion before proceeding.

Thanks,

CS Siddhartha Banik