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Loans in Rupees to NRIs

  

Notification No: RBI Notification No FEMA 115/2004 RB*

G.S.R. 351(E) In exercise of the powers conferred by clause (e) of Sub-section (3) of Section 6 and Sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in partial modification of its Notification No. FEMA-4/2000-RB dated May 3, 2000, the Reserve Bank of India makes the following Regulations to amend the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulation, 2000, namely:

1. Short title and commencement:

(i) These Regulations may be called the Foreign Exchange Management (Borrowing and Lending in Rupees) (Amendment) Regulations, 2004.

(ii) They shall come into force from the date of their publication in the Official Gazette.

2. Amendment of the Regulations:

In the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations 2000, in Regulation 7, the following amendments shall be made, namely:

(i) the title shall be substituted as Loans in Rupees to Non-residents

(ii) after Sub-regulation (B) the following Sub-regulation shall be inserted, namely:


(C) for any purpose as per the loan policy laid down by the Board of Directors of the Authorised Dealer:

Provided that:

(a) the loan shall not be utilised either singly or in association with other person for


(i) the business of chit fund, or

(ii) Nidhi Company, or

(iii) agricultural or plantation activities or in real estate business or construction of farm houses, or

(iv) trading in Transferable Development Rights (TDRs), or

(v) investment in capital market including margin trading and derivatives.


(b) the Reserve Banks directives on such advances shall be duly complied with;

(c) the loan amount shall not be credited to NRE/FCNR(B) accounts;

(d) the loan amount shall not be remitted outside India;

(e) repayment of loan shall be made from out of remittances from outside India through normal banking channels or by debit to NRE/FCNR(B)/NRO accounts.


Sd/-
Shyamala Gopinath
Executive Director
[F. No. 1/23/EC/2000-Vol.II]

Foot Note: The Principal Regulations were published in the Official Gazette vide G.S.R. No. 387(E) dated May 3, 2000 in Part II, Section 3, Sub-section (i) and subsequently amended vide G.S.R. Nos. 90(E) dated November 27, 2000 and 754(E) dated August 20, 2002.

Ozg FEMA Consultant
Ozg Consulting (P) Limited

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