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There are some conditions enforced by the RBI upon NRI borrowings but they are allowed to take loan for various purposes.
Queries you asked:
Loans in Rupees to non-residents
An NRI may borrow a rupee loan
· Against the security of shares or other securities held in his or her name.
· Against the security of immovable property (other than agricultural or plantation property or farm house), held by him or her in accordance with Foriegn Exchange Management Act (FEMA) Regulations,
· The loan shall be utilised for meeting the borrower’s personal requirements or for his own business purposes.
· The loan shall not be utilised, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely:
(a) The business of chit fund.
(b) Nidhi Company
(c) Agricultural or plantation activities or in real estate business or construction of farm houses
(d) Trading in Transferable Development Rights (TDRs).
Explanation - For the purpose of item (c) of proviso, real estate business shall not include development of townships, construction of residential/commercial premises, roads or bridges.
· Reserve Bank of India’s (RBI) directives on advances against shares/securities/immovable property shall be duly complied with.
· The loan amount shall not be credited to the NRE (Non resident eqauted Rupee) or FCNR (Foreign Currency Non Resident) account of the borrower.
· The loan amount shall not be remitted outside India.
· Repayment of loan shall be made from out of remittances from outside India through normal banking channels or by debit to the NRO (Non Resident Ordinary) /NRE (Non Resident External Rupee) /FCNR (Foreign Currency Non Resident) accounts of the borrower or out of the sale proceeds of the shares or securities or immovable property, against which such loan was granted.
Tags: Non Resident Indians (NRIs) , NRO (Non Resident Ordinary) /NRE (Non Resident External Rupee, FCNR, Person of Indian Origin, Foreign Currency Non Resident, Loans in Rupees , security of shares , Foriegn Exchange Management Act (FEMA) , borrower’s personal requirements, Nidhi Company, Agricultural or plantation activities , Transferable Development Rights (TDRs), Reserve Bank of India’s (RBI) ,
May 18 2013, 17:26
- in MARKET OUTLOOK
May 17 2013, 12:39
- in MARKET OUTLOOK