Dear All,
Can anyone suggest whether an Indian resident taken loan from NRI friend(not relative) as per FEMA ?? if allowable section details
What are the consequences for violations of FEMA if loan from NRI friend is prohibited.
Thanks in advance
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Loan from nri friend-fema
Replies (1)
Refer Reg. 4 of FEM (Borrowing and Lending in Indian Rupees) Regulations, 2000
A resident can borrow from a NRI non-relative subject to following conditions:
- Receipt of loan shall be on a non-repatriation basis - money will first come in NRO account and interest/principal repayment by resident shall be to NRO account only - this money cannot be repatriated out of India
- period of loan should not exceed 3 years
- rate of interest cannot exceed 2 percentage points over prevailing bank rate
It is advisable that a proper loan agreeemnt on the above lines are drawn up to evidence the transaction.
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