Can overseas earned income saved in US bank while being a non resident be transfered to a US citizen friend in US as loan after moving back to India?

[RAG]

I have funds earned through employment in the USA while I was a resident in the USA and saved in US accounts.

1) Now after moving to India (current Indian resident) can the same funds be transfered to not a relative but a US friends US bank account from my US overseas bank account as a gift or loan?

2) Will either the 250k LRS annual limit or the External Commercial Borrowing (ECB) rules apply to such transfered funds?

3) Is there z need of obtaining prior approval from the RBI for such transfer?

4) Can the funds be greater than 250k in 1 year?

-Thanks

[Ryan Vaz]

Yes — you can in principle transfer the funds held in your U.S. bank account to a U.S. friend’s U.S. bank account as a gift or loan, but because you are now an Indian resident the transaction will be viewed under FEMA / RBI rules for resident individuals. Transfers which constitute an outward remittance by a resident (including transactions routed through or arising from your foreign currency account) are subject to the Liberalised Remittance Scheme (USD 250,000 per financial year) unless you obtain specific prior RBI approval. ECB rules do not apply here (ECB governs resident entities/borrowers raising borrowings from non-residents; you are the remitter/lender). Banks and tax authorities may also apply documentation checks and TCS collection rules on remittances under LRS.

[Shilpi Jain]

Your funds held in US account that were earned when you were a resident there, will not be subjected to the USD 2.5L limit. However, a resident cannot lend in forex to an NRI who is not a relative. So even though there is no limit on usage of your foreign earned funds, such lending is not permitted.

So you may have to see whether RBI permission would be possible for this.

[RAG]

Thanks Ryan & Shilpi

[Varshitha N]

Hi Rag,

I came across your post about trading US options while being based in India. I'd love to connect and learn more as I recently moved back to India after spending a few years in the US, and I'm exploring how to continue trading US options from here.

AI Summary

FEMA and Liberalised Remittance Scheme rules on sending foreign-earned funds from India to a U.S. friend
Transfer of funds earned in the United States and retained in a U.S. bank account after returning to India raises FEMA and Liberalised Remittance Scheme questions. The discussion asks whether such money may be sent to a U.S. friend's account as a gift or loan, whether the USD 250,000 annual remittance cap applies, whether prior RBI approval is needed, and whether the amount may exceed that ceiling. The replies note that ECB rules are not applicable, while views differ on whether the funds are outside the LRS limit or whether resident outward remittances remain subject to LRS unless RBI approval is obtained.