Foreign Exchange Management (Borrowing or Lending in Foreign Currency) Regulations

[MALAYALA MANORAMA]

This is a just as a clarification required with respect to Foreign Exchange Management  (Borrowing or Lending in Foreign Currency) Regulations. We find that the regulation deals mostly with Borrowing in Foreign Currency. Can we be advised of the provisions laid down for Lending in foreign currency by an Indian company to a foreign entity.

 

Can an Indian Company extend a loan to a foreign entity? If such loans are permitted, we would like to know the guidelines/procedures prescribed. 

 

[YAGAY andSUN]

Please seek the Clarification from your AD/RBI.

[CASeetharaman KC]

Please refer to Notification No.FEMA 3 /2000-RB dated 3rd May 2000 on this aspect. The areas where a person other than an authorised dealer can remit foriegn currency loans is specified here

AI Summary

Lending in foreign currency requires notification-based permission and prior regulatory or authorised-dealer clarification before remittance. Whether an Indian company may extend a loan to a foreign entity under the Foreign Exchange Management (Borrowing or Lending in Foreign Currency) Regulations depends on notification-driven permissions and procedural conditions; persons other than an authorised dealer may remit foreign currency loans only where expressly permitted by notification, and parties are directed to seek clarification from an authorised dealer or the central regulator and to consult the relevant notification enumerating permitted remittances.