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

AI Summary

Transfer of overseas earned savings to a US friend may be subject to RBI Liberalised Remittance Scheme limits. A transfer from foreign accounts by an individual who has become an Indian resident will be treated as an outward remittance and generally falls under the Liberalised Remittance Scheme USD 250,000 annual ceiling unless specific prior RBI approval is obtained; ECB rules do not apply, though banks and tax authorities may require documentation and apply TCS. An alternative view in the replies notes that funds earned while resident abroad may not automatically be within the LRS cap but that lending in forex by a resident to a non relative NRI may be restricted and could require RBI permission.