On Repatriable Basis in Foreign Currency:
As per the above mentioned RBI Regulation, Loan can be given by NRI/OCI to their close relative in Foreign Currency subject to below mentioned condition:
- The amount of the loan should not exceed US 250 000.
- Loans can be from remittances, NRE, FCNR A/cs in Foreign Currency.
- Minimum maturity period of loan is 1 Year.
- Loan is free of interest.
On Non Repatriable Basis in Indian Rupees:
As per the above mentioned RBI Regulation, Loan can be given by NRI/OCI to their Resident Individual in INR subject to below mentioned condition:
- Loans can be from remittances, NRO, NRE, FCNR A/cs.
- Loan period not to exceed 3 years.
- Rate of Interest not to exceed 2 over the Bank Rate (Repo Rate).
On Non Repatriable Basis in Indian Rupees to Indian proprietorship concern/ partnership firm or company on non repatriation basis from NRI:
Deposit and repayment to and from NRO A/c
- The maturity period of deposit shall not exceed 3 years
and has to be repaid within 3 years. - The rate of interest payable on deposits shall not exceed the ceiling rate prescribed under Companies Act.
- There are a lot of regulatory restrictions on acceptance of deposits from NRI on repatriable basis (through NRE bank A/c). Therefore, it is advisable to accept deposits from NRI on non repatriable basis (through NRO bank A/c).
- The funds will flow from and back to the NRO bank A/c of the NRI in India.
- Any business concern accepting deposits from NRI shall not exceed the rate prescribed under Companies (Acceptance of Deposits) Rules, 2014
- As per the above Company Law regulation, the interest on deposit cannot exceed maximum rate of interest or brokerage prescribed by the Reserve Bank of India for acceptance of deposits by non banking financial companies.
- The deposit shall not be utilized for relending or for undertaking agricultural/ plantation activities or real estate business or for investing in any other concern or firm or company engaged in such activity.
Maximum limit of acceptance of deposits by companies as per Companies Act, 2013:
- As per section 73 of the Companies Act, 2013, the company can accept deposits from its directors and their relatives * without any limit.
- Deposits from members can also be accepted up to 100% percent of aggregate of the paid up share capital , free reserves and Securities Premium account
- The deposits should not be from borrowed funds.
- So, a private company can accept money from NRI directors & their relatives without any upper limit and from members of the company up to the specified limits if the conditions are met. Loan from any other party is strictly prohibited.
Loans from banks against security of funds held in the NRO/NRE bank account to NRI or to third parties:
- Loans against NRO/NRE fixed deposits can be availed in rupees to NRI or any other person in India.
- The loan funds shall be utilized only in India for personal requirements or business purpose and not for carrying on agricultural/ plantation activities or real estate business or for relending.
- Loans against NRE deposits can also be used by the depositor for acquiring flat/house in India for his own residential use.
- There should be no direct or indirect foreign exchange consideration (monetary benefit) to the NRI agreeing to pledge his deposits with the to enable the resident individual/ firm/ company to obtain such facilities.
- Corresponding branches of banks in foreign countries can lend loans against security of deposits in NRE/NRO account in India, provided advances are fully secured by the fixed deposits and as per the regulations prescribed.
