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Reserve Bank of India
Exchange Control Department
Central Office
Mumbai
A.P.(DIR Series) Circular No.27
October 10, 2003
To
All Authorised Dealers in Foreign Exchange
Madam/Sirs,
FEMA 1999 – Grant of Rupee Loans
to
NRI/PIO Employees of Indian Body Corporate
Attention of Authorised Dealers
is invited to Regulation 8 of Notification
No.FEMA 4/2000 RB dated May 3, 2000, in terms of which an Authorised Dealer
or a housing finance institution in India approved by the National Housing Bank
may provide housing loan to a Non-Resident Indian or a Person of Indian Origin
resident outside India for acquisition of a residential accommodation in India
subject to conditions indicated therein.
2. On a review, it has been
decided to grant general permission to Indian companies, viz. a body corporate
registered or incorporated in India, to grant rupee loans to its employees who
are Non-Resident Indians or Persons of Indian Origin, subject to the following
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 subject to
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 specified in sub-clauses (i) to (iv) of clause
(1) and in clause (2) of Regulation 6 of Notification No.FEMA.4/2000-RB dated
May 3, 2000, referred to above;
- The lender shall credit the loan amount to the
borrower’s NRO account in India or shall ensure credit to such account by
specific indication on the payment instrument;
- The loan agreement shall specify that the repayment
of loan shall be by way of remittance from outside India or by debit to NRE/NRO/FCNR
Account of the borrower and the lender shall not accept repayment by any other
means.
Accordingly, Notification
No.FEMA.67/2000-RB dated August 20, 2002 has been issued. A copy of the
said Notification is enclosed. Necessary amendments to Notification No.FEMA.4/2000
RB dated May 3, 2000 may please be made.
3. Authorised Dealers may bring
the contents of this circular to the notice of their constituents concerned.
4. The directions contained
in this circular have been issued under Section 10(4) and Section 11(1) of the
FEMA, 1999 (42 of 1999).
Yours faithfully,
Grace Koshie
Chief General Manager
Reserve Bank of India
(Exchange Control Department)
Central Office
Mumbai 400 001
Notification No.FEMA.67/2002-RB
dated August 20, 2002
Foreign Exchange Management (Borrowing
and
Lending in Rupees) (Amendment) Regulations, 2002
In exercise of the powers conferred
by clause (e) of sub-section (3) of Section 6 and sub-section (2) of Section
47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial
modification of its Notification
No.FEMA.4/RB-2000, dated May 3, 2000, Reserve Bank of India makes the following
Regulations to amend the Foreign Exchange Management (Borrowing and Lending
in Rupees) Regulations, 2000, as amended from time to time namely :
Short title and commencement
1. (a) These Regulations
may be called the Foreign Exchange Management (Borrowing and Lending in Rupees)
(Amendment) Regulations, 2002.
(b) They shall come into
force from the date of their publication in the Official Gazette.
Amendment of the Regulations
2. In the Foreign Exchange
Management (Borrowing and Lending in Rupees) Regulations, 2000, after Regulation
8, the following Regulation shall be inserted, namely :
'8A Rupee Loans to NRI/PIO
employees of Indian body corporate
A body corporate registered
or incorporated in India may grant rupee loan to its employees who is a
non-resident Indian or a Person of Indian Origin, subject to the following
conditions, namely :
- 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 specified in sub-clauses (i) to
(iv) of clause (1) and in clause (2) of Regulation 6;
- The lender shall credit the loan amount
to the borrower's NRO Account in India or shall ensure credit to such
Account by specific indication on the payment instrument;
- It shall be a term of the loan agreement
that the repayment of loan shall be made by way of remittance from outside
India or from NRE/NRO/FCNR Account of the borrower; and the lender shall
not accept repayment made from any other source.
Sd/-
K.J.Udeshi
Executive Director
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