TaxTMI 
TaxTMI 
Master Direction – Borrowing and Lending transactions in Indian Rupee between Persons Resident in India and Non-Resident Indians/ Persons of Indian Origin
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed. 3. Instructions issued in respect of aforesaid transactions have been compiled in this Master Direction as also instructions regarding overdraft in INR account maintained by a bank outside India with an authorised dealer in India since the latter set of instructions are also part of aforesaid Regulations. The list of underlying notifications/ circulars which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Direction on reporting (Master Direction No. 18 dated January 01, 2016) 4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simult....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t (Deposits) Regulations, 2000 notified vide Notification No. FEMA 5/2000-RB dated May 03, 2000. 1.2 The terms 'Housing finance institution' and National Housing Bank' shall have the meanings assigned to them in the National Housing Bank Act, 1987. 1.3 The term 'Liberalised Remittance Scheme' means the scheme formulated in terms of circular A.P. (DIR Series) Circular No. 64 dated February 4, 2004 and as amended from time to time. 1.4 The terms 'Person Resident in India' and 'Person Resident outside India' shall have the same meanings as assigned to them in Sections 2(v) and 2(w) of the Foreign Exchange Management Act, 1999 (FEMA). 1.5 'Relative' means a 'relative' as defined under the Companies Act, 1956/ 2013: Act of 1956 Act of 2013 U/s 6: MEANING OF "RELATIVE" A person shall be deemed to be a relative of another, if, and only if, (a) they are members of a Hindu undivided family ; or (b) they are husband and wife ; or (c) the one is related to the other in the manner indicated in Schedule IA. U/s 2(77) ''relative'', with reference to any person, means anyone who is related to another, if- (i) they are members of a Hindu Undivided Family; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpanies in India: A company incorporated in India may borrow in INR, on repatriation or non-repatriation basis, from NRIs/PIOs after satisfying the following terms and conditions: i. Borrowing company does not and shall not: * Carry on agricultural/plantation/real estate business; or * Trade in transferable development rights; or * Act as Nidhi or Chit fund company. ii. Borrowing is by issuance of non-convertible debentures (NCDs); iii. The issue of NCDs is made by public offer; iv. The rate of interest is not more than the prime lending rate of State Bank of India as on the date on which the resolution approving the issue is passed in the borrowing company's General Body Meeting plus three per cent; v. Period of loan shall not be less than three years; vi. If the borrowing is on repatriation basis then the percentage of NCDs issued to NRIs/PIOs to the total paid up value of all NCDs issued shall not exceed the ceiling prescribed for issue of equity shares/convertible debentures for foreign direct investment in India. Further, the funds towards borrowing should be received through inward remittance from outside India or by debit to NRE/FCNR (B) account of the investor m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and other securities or against the security of immovable property (other than agricultural or plantation land or farm house) held by the latter subject to the following terms and conditions: * The utilisation of loans shall meet the provisions given at 2.1.3.i above. Further, loan proceeds cannot be used for any other activity where foreign investment is not allowed. This shall be applicable even if the loan is utilised in association with other person; * The loan amount shall not be remitted outside India or credited to NRE/FCNR(B)/NRNR account of the borrower; * The directives of RBI on such loans and directives on advances against shares/securities/immovable property shall be duly complied with; * The repayment of loan should be either by inward remittance from outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the borrower and/or out of sale proceeds realised through securities offered for the loans. Further, these loans can also be repaid by any relative (as defined under Companies Act) of the borrower in India through account to account transfer; * Subject to aforesaid terms and conditions and with additional requirements like compliance with appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of rental income derived from renting out the property acquired or by any relative of the borrower in India by crediting the borrower's loan account through account to account transfer; * The rate of interest on the loan shall conform to the directives issued, if any, by the RBI and/ or NHB. 5. INR loans by Indian body corporate to its NRI/PIO employees A body corporate registered or incorporated in India may grant rupee loan to its NRI/PIO employees subject to the following terms and conditions: * The loan shall be granted only for personal purposes including purchase of housing property in India; * The loan shall be granted in accordance with the lender's Staff Welfare Scheme/Staff Housing Loan Scheme and other terms and conditions applicable to its staff resident in India; * The lender shall ensure that the loan amount is not used for the purposes mentioned under 2.1.3 above; * The lender shall credit the loan amount to the borrower's NRO account or shall ensure credit to such account by specific indication on the payment instrument; * The repayment of loan shall be made only by way of remittance from outside India or from NRE/NRO/FCNR(B) account of t....