Borrowing and Lending in Rupees Foreign Currency-220414-Final… · · 2017-09-08BORROWING IN...

IntensiveStudyCourseonFEMA

TheChamberofTaxConsultants

Borrowing

and

Lending

inForeign

CurrencyandRupees

TheChamberofTaxConsultants

25April2014

CONTENTS

�Statutory Framework

�Borrowing in Foreign Currency

�Lending in Foreign Currency

�Borrowing in Rupees

�Lending in Rupees

�FAQs

Glossary

AD

Au

tho

rize

d D

eale

r B

ank

AF

Cs

Ass

et F

inan

ce C

om

pan

ies

CIC

sC

ore

Inve

stm

ent

Co

mp

anie

s

DTA

Do

mes

tic

Tari

ff A

rea

EC

BE

xter

nal

Co

mm

erci

al B

orr

ow

ing

s

EE

FC

Exc

han

ge

Ear

ner

s' F

ore

ign

Cu

rren

cy A

cco

un

t

ES

OP

Em

plo

yee

Sto

ck O

pti

on

Pla

n

EX

IME

xpo

rt Im

po

rt B

ank

of

Ind

ia

LR

SL

iber

alis

ed R

emit

tan

ce S

chem

e

MF

IsM

icro

Fin

ance

Inst

itu

tio

ns

NC

Ds

No

n C

on

vert

ible

Deb

entu

res

NG

Os

No

n-G

ove

rnm

ent

Org

aniz

atio

ns

NH

BN

atio

nal

Ho

usi

ng

Ban

k

NR

EN

on

Res

iden

t E

xter

nal

Acc

ou

nt

NR

IN

on

Res

iden

t In

dia

n

EX

IME

xpo

rt Im

po

rt B

ank

of

Ind

ia

FC

CB

Fo

reig

n C

urr

ency

Co

nve

rtib

le B

on

ds

FC

EB

Fo

reig

n C

urr

ency

Exc

han

gea

ble

Bo

nd

s

FC

NR

Fo

reig

n C

urr

ency

No

n R

esid

ent A

cco

un

t

FE

MA

Fo

reig

nE

xch

ang

e M

anag

emen

t A

ct,

1999

FD

IF

ore

ign

Dir

ect

Inve

stm

ent

FIP

BF

ore

ign

Inve

stm

ent

Pro

mo

tio

n B

oar

d

FY

Fin

anci

alY

ear

ICIC

IIn

du

stri

alC

red

itan

dIn

vest

men

tC

orp

ora

tio

no

fIn

dia

Ltd

.

IDB

IIn

du

stri

al D

evel

op

men

t B

ank

of

Ind

ia

NR

NR

No

n R

esid

ent

No

n R

epat

riab

le A

cco

un

t

NR

ON

on

Res

iden

t O

rdin

ary

Acc

ou

nt

NR

SR

No

n R

esid

ent

Sp

ecia

l Ru

pee

Acc

ou

nt

OC

Bs

Ove

rsea

s C

orp

ora

te B

od

ies

PIO

P

erso

n o

f In

dia

n O

rig

in

PL

RP

rim

e L

end

ing

Rat

e

RB

I T

he

Res

erve

Ban

k o

f In

dia

SB

IS

tate

Ban

k o

f In

dia

SE

ZS

pec

ial E

con

om

ic Z

on

e

SID

BI

Sm

all I

nd

ust

ries

Dev

elo

pm

ent

Ban

k o

f In

dia

SP

Vs

Sp

ecia

l Pu

rpo

se V

ehic

les

TD

Rs

Tran

sfer

able

Dev

elo

pm

ent

Rig

hts

�Sub-s

ecti

on

3of

Secti

on

6of

FEM

A

�Fore

ign

Exchange

Managem

ent

(Borr

ow

ing

or

Lendin

gin

Fore

ign

Exchange)

Regula

tions,

2000

-FEM

A3

/2000-R

Bdate

d3

May

2000

as

am

ended

from

tim

eto

tim

e

�Fore

ign

Exchange

Managem

ent

(Borr

ow

ing

or

Lendin

gin

Rupees)

Regula

tions,

2000

-FEM

A4

/2000-R

Bdate

d3

May

2000

as

am

ended

from

tim

eto

tim

e

�O

ther

Noti

ficati

ons

STATUTORY FRAMEWORK

�M

ast

er

Cir

cula

rN

o.

12/2013-1

4date

d1

July

2013

(Update

das

on

20

Septe

mber

2013)

�C

ircula

rsis

sued

by

the

RBIfr

om

tim

eto

tim

e

Page 4

BORROWING IN FOREIGN CURRENCY


ECB and Trade Credits

Borrowing by person other than AD

Borrowing by an AD

ECB –Key Compliances

FCEB & FCCB

ECB and Trade Credits


Borrowing by an AD

AnADcanborrowinforeigncurrencyinthefollowingcases

�Borr

ow

ing

from

its

Head

Off

ice

or

bra

nch

or

corr

esp

ondent

outs

ide

India

up

to50%

of

its

unim

pair

ed

Tie

rIcapit

alor

USD

10

million,

whic

hever

ishig

her

subje

ct

toth

econdit

ions

of

the

RBI

�O

vers

eas

bra

nch

of

an

AD

can

borr

ow

inth

enorm

al

cours

eof

bankin

gbusi

ness

outs

ide

India

subje

ct

toth

eguid

elines

of

the

RBI

and

regula

tory

auth

ori

tyof

the

countr

yw

here

the

bra

nch

is

locate

d

Page 7

�An

AD

can

borr

ow

from

abank

or

financia

lin

stit

uti

on

outs

ide

India

for

the

purp

ose

of

gra

nti

ng

pre

-

ship

ment

or

post

-ship

ment

cre

dit

toit

sexport

er

const

ituent

subje

ct

toth

eguid

elines

of

the

RBI


Borrowing by persons other than AD –for

specific purpose

�A

pers

on

resi

dent

inIn

dia

can

borr

ow

(by

way

of

loan/overd

raft

/any

oth

er

cre

dit

facilit

y)

from

an

overs

eas

bank

for

the

foll

ow

ing

—Executi

on

of

atu

rnkey

pro

ject

outs

ide

India

—Executi

on

of

civ

ilconst

ructi

on

contr

act

outs

ide

India

—Export

son

defe

rred

cre

dit

term

s

Page 8Subje

ct

toth

ete

rms

&condit

ions

stip

ula

ted

by

the

Auth

ori

tygra

nti

ng

appro

val

for

the

pro

ject/

contr

act

and

export

inaccord

ance

wit

hExport

of

Goods

and

Serv

ices

Regula

tions

�For

import

of

goods

into

India

,an

India

nim

port

er

can

avail

fore

ign

curr

ency

cre

dit

for

aperi

od

not

exceedin

g6

month

sexte

nded

by

the

overs

eas

supplier,

pro

vid

ed

the

import

isin

com

pliance

wit

h

Export

Import

policy

of

the

Govern

ment

of

India

info

rce


Borrowing by resident individual from close

relatives

�A

resi

dent

indiv

idual

can

borr

ow

up

toU

SD

2,5

0,0

00

(or

its

equiv

ale

nt)

from

his

clo

sere

lati

ves

outs

ide

India

subje

ct

toth

efo

llow

ing

condit

ions:

—M

inim

um

matu

rity

should

be

1year

—Loan

should

be

inte

rest

-fre

e

—Loan

should

be

receiv

ed

eit

her

by

way

of

inw

ard

rem

itta

nces

or

by

debit

toN

RE/FCN

Raccount

of

the

lender

Page 9

of

the

lender


ECB & Trade Credits L

oan f

rom

fo

reig

n

invest

or/

gro

up c

o.

Loan f

rom

overs

eas

Bank

FC

EB

Page 1

0

EC

BBuyer’

s cre

dit

Supplier’

s cre

dit

Opti

onall

y/

part

ly

convert

ible

pre

fere

nce

share

s

FC

CB


ECB

AUTOMATIC ROUTE

Page 1

1

AUTOMATIC ROUTE

No RBI approval required

APPROVAL ROUTE

RBI approval required

BORROWING IN FOREIGN CURRENCY –ECB

Automatic Route –not available for

�O

n-l

endin

g

�In

vest

ment

incapit

al

mark

et

�Acquir

ing

acom

pany

inIn

dia

�Realest

ate

secto

r

Page 1

2

�W

ork

ing

capit

al

/genera

lcorp

ora

tepurp

ose

�Repaym

ent

of

rupee

loan

�Acquis

itio

nof

land

BORROWING IN FOREIGN CURRENCY -ECB

Automatic Route –Eligible Borrowers

�In

dia

ncom

panie

sin

manufa

ctu

ring

/in

frast

ructu

re/re

al-

indust

rial

secto

r

�In

dia

ncom

panie

sin

specif

ied

serv

ice

secto

rsi.

e.

Hote

ls/

Hosp

itals

/Soft

ware

�U

nit

sin

SEZ

for

ow

nre

quir

em

ent.

SEZ

cannot

transf

er

or

on-l

end

EC

Bfu

nds

tosi

ster

concern

sor

any

unit

inD

TA

�In

frast

ructu

reFin

ance

Com

panie

sexcept

financia

lin

term

edia

ries

Page 1

3

�In

frast

ructu

reFin

ance

Com

panie

sexcept

financia

lin

term

edia

ries

�N

BFC

s-

IFC

sand

AFC

s

�N

GO

sand

MFIs

engaged

inm

icro

finance

acti

vit

ies

subje

ct

toth

epre

scri

bed

cri

teri

a

�SID

BI

Individuals, Trusts and Non-profit making

organizations not eligible to raise ECB


Automatic Route –Recognized lenders

�In

tern

ati

onalbanks

�In

tern

ati

onalcapit

al

mark

ets

�M

ult

ilate

ralfi

nancia

lin

stit

uti

ons

(such

as

IFC

,AD

B,

CD

C,

etc

.)

�Regio

nalfi

nancia

lin

stit

uti

ons

�G

overn

ment

ow

ned

develo

pm

ent

financia

lin

stit

uti

ons

�Export

cre

dit

agencie

s

�Suppliers

of

equip

ments

�Fore

ign

coll

abora

tors

and

Page 1

4

�Fore

ign

coll

abora

tors

and

�Fore

ign

equit

yhold

ers

[oth

er

than

ers

twhile

OC

Bs]

subje

ct

toth

efo

llow

ing

condit

ions:

Ceiling limit of ECB

Criteria

up t

o U

SD

5 m

illion

Dir

ectl

y h

old

s at

least

25%

paid

up e

quit

y o

f borr

ow

er

com

pany

Exceedin

g U

SD

5 m

illion

�D

irectl

y h

old

s at

least

25%

paid

up e

quit

y o

f borr

ow

er

com

pany a

nd

�EC

B L

iabilit

y –

Equit

y R

ati

o d

oes

not

exceed 4

:1


Automatic Route –Perm

itted End use

�Im

port

of

serv

ices,

technic

al

know

-how

and

paym

ent

of

license

fees

incase

of

com

panie

sin

manufa

ctu

ring

&in

frast

ructu

rese

cto

r

�Im

port

of

capit

al

goods

�N

ew

pro

jects

�M

odern

izati

on/expansi

on

of

exis

ting

pro

ducti

on

unit

sin

Real

Indust

rial/

Specif

ied

Serv

ice/

Infr

ast

ructu

rese

cto

r

Page 1

5

Infr

ast

ructu

rese

cto

r

�In

tere

stduri

ng

const

ructi

on

peri

od

for

India

nC

om

panie

sw

hic

hare

inth

eIn

frast

ructu

rese

cto

r

�O

vers

eas

Dir

ect

Invest

ment

inJVs

/W

OSs

�Acquis

itio

nof

share

sin

the

dis

invest

ment

pro

cess

BORROWING IN FOREIGN CURRENCY–ECB

Automatic Route –Perm

itted End use –

Specific cases

�N

BFC

–IF

Cs

-fo

ron-l

endin

gto

the

infr

ast

ructu

rese

cto

r

�N

BFC

–AFC

s-f

or

financin

gth

eim

port

of

infr

ast

ructu

reequip

ments

�C

apit

alExpendit

ure

for

main

tenance

and

opera

tions

of

toll

syst

em

sfo

rro

ads

and

hi g

hw

ay

Page 1

6

�SID

BI–

tole

nd

toth

eborr

ow

ers

inth

eM

SM

Ese

cto

r

�Paym

ent

for

Spectr

um

All

ocati

on

(2G

)

�Lendin

gto

self

help

gro

ups

or

for

mic

rocre

dit

or

for

mic

rofi

nance

acti

vit

yby

NG

O

Infrastructure Sector –power, telecommunications, railways, roads including bridges, sea port& airport,

industrial park, urban infrastructure, mining, exploration & refining and cold storage & cold room facility


Automatic Route –Amount and maturity

Sector

Maximumamount of ECB during per FY

Com

panie

s (o

ther

than s

erv

ice s

ecto

r)U

SD

750 m

illion

Hote

ls,

hosp

itals

and

soft

ware

secto

rU

p t

o U

SD

200 m

illion

�AmountofECB:

Page 1

7

NG

Os

Up t

o U

SD

10 m

illion

NBFC

-IFC

s a

nd N

BFC

-AFC

s U

p t

o 7

5 p

er

cent

of

their

ow

ned f

unds

SID

BI

Up t

o 5

0 p

er

cent

of

their

ow

ned f

unds

�Maturityperiod:

Amount of ECB

Average maturityperiod

Up t

o U

SD

20 m

illion o

r it

s equiv

ale

nt

3years

Above

USD

20

million

and

up

toU

SD

750

million

or

its

equiv

ale

nt

5 y

ears


Automatic Route –All-in-cost ceilings

Average maturityperiod

All-in-costceiling over 6 months LIBOR

3to

5years

350 b

asi

s poin

ts

More

than 5

years

500 b

asi

s poin

ts

�AmountofECB:

�All-i

n-c

ost

inclu

des

rate

of

inte

rest

,oth

er

fees

and

expense

sin

fore

ign

curr

ency

except

com

mit

ment

fee,

pre

-paym

ent

fee,

and

fees

payable

and

paym

ent

of

wit

hhold

ing

tax

inIn

dia

n

Page 1

8

com

mit

ment

fee,

pre

-paym

ent

fee,

and

fees

payable

and

paym

ent

of

wit

hhold

ing

tax

inIn

dia

n

Rupees.

�In

the

case

of

fixed

rate

loans,

the

swap

cost

plu

sm

arg

insh

ould

be

the

equiv

ale

nt

of

the

floati

ng

rate

plu

sth

eapplicable

marg

in


Approval Route –Eligible Borrowers

�EXIM

bank

for

on-l

endin

gand

specif

icpurp

ose

s

�Banks

/Fin

ancia

lIn

stit

uti

ons

part

icip

ati

ng

inte

xti

le/

steel

rest

ructu

ring

subje

ct

tocert

ain

condit

ions

�EC

Bw

ith

min

imum

avera

ge

matu

rity

of

5years

by

NBFC

�H

ousi

ng

Fin

ance

Com

panie

sfo

rra

isin

gFC

CB

subje

ct

tocondit

ions

�SPVs

set

up

tofi

nance

infr

ast

ructu

recom

panie

s/

pro

jects

�M

ult

i-Sta

teC

o-o

pera

tive

Socie

tyengaged

inm

anufa

ctu

ring

subje

ct

tocondit

ions

�SEZ

/N

ati

onal

Manufa

ctu

ring

Invest

ment

Zone

develo

pers

for

pro

vid

ing

infr

ast

ructu

refa

cilit

y

Page 1

9

�SEZ

/N

ati

onal

Manufa

ctu

ring

Invest

ment

Zone

develo

pers

for

pro

vid

ing

infr

ast

ructu

refa

cilit

y

wit

hin

the

SEZ

�In

dia

nC

orp

ora

te(s

)in

serv

ice

secto

rsoth

er

than

Hote

l,H

osp

ital

and

Soft

ware

Secto

ri.

e.

main

ly

R&

D,

mis

cell

aneous

serv

ice

com

panie

s,etc

for

EC

Bs

from

fore

ign

equit

yhold

ers

�H

old

ing

Com

panie

s/

CIC

sre

gula

ted

by

the

RBI,

subje

ct

tocondit

ions

for

pro

ject

use

inSPVs

–

Refi

nancin

gof

Rupee

loans

�Low

cost

aff

ord

able

housi

ng

pro

jects

develo

pers

/builders

/H

ousi

ng

Fin

ance

Com

panie

s

�C

om

panie

sunder

invest

igati

on

All cases falling outsidethe purview of automatic route and average maturity period would

also be covered under the approval route


Approval Route

–Recognized lenders

�Recogniz

ed

lenders

covere

dunder

auto

mati

cro

ute

as

dis

cuss

ed

inSlide

No.

14

are

als

ore

cogniz

ed

lenders

under

the

appro

val

route

subje

ct

toth

efo

llow

ing

excepti

on:

—Fore

ign

equit

yhold

ers

[oth

er

than

ers

twhile

OCBs]

for

EC

Bexceedin

gU

SD

5m

illion,

debt-

equit

yra

tio

should

not

exceed

7:

1(a

sagain

st4:1

pro

vid

ed

under

the

auto

mati

cro

ute

)

�In

dir

ect

equit

yhold

ers

,su

bje

ct

toin

dir

ect

hold

ing

of

at

least

51%

by

the

lender

inth

eIn

dia

n

com

pany

Page 2

0

�G

roup

com

pany

pro

vid

ed

both

the

borr

ow

er

and

the

fore

ign

lender

are

subsi

dia

ries

of

the

sam

e

pare

nt


Approval Route –Perm

itted End use

�End

use

perm

itte

dunder

the

auto

mati

cro

ute

as

dis

cuss

ed

inSlide

No.

15

are

als

operm

itte

dunder

the

appro

val

route

�Repaym

ent

of

rupee

loan

availed

from

dom

est

icbankin

gsy

stem

�Paym

ent

for

Spectr

um

All

ocati

on

(3G

)

�W

ork

ing

capit

al

for

civ

ilavia

tion

secto

r

Page 2

1

�Repaym

ent

of

Rupee

loans

and/or

fresh

Rupee

capit

al

expendit

ure

for

com

panie

sw

ith

consi

stent

fore

xearn

ings

–U

SD

10

billion

schem

e

�W

ith

eff

ect

from

4Septe

mber

2013,

Eligib

leIn

dia

nborr

ow

ers

can

avail

EC

Bs

from

their

fore

ign

equit

yhold

er

forgeneralcorporate

purposes

subje

ct

toth

efo

llow

ing

condit

ions:

—M

inim

um

paid

-up

equit

yof

25%

should

be

held

dir

ectl

yby

the

overs

eas

lender

—Such

EC

Bs

would

not

be

use

dfo

rany

purp

ose

not

perm

itte

dunder

the

exta

nt

EC

Bguid

elines

(inclu

din

gon-l

endin

gto

their

gro

up

com

panie

s/

step-d

ow

nsu

bsi

dia

ries

inIn

dia

);and

—Repaym

ent

of

the

pri

ncip

al

shall

com

mence

only

aft

er

com

ple

tion

of

min

imum

avera

ge

matu

rity

of

7years

.N

opre

paym

ent

would

be

all

ow

ed

befo

rem

atu

rity


Approval Route

–Amount and maturity

Sector

Amount of ECB during per FY

Com

panie

s(o

ther

than

serv

ice

secto

r)Beyond U

SD

750 m

illion

Hote

ls,

hosp

itals

and

soft

ware

secto

rBeyond U

SD

200 m

illion

�AmountofECB:

�Maturityperiod:

Page 2

2

�Maturityperiod:

No

pre

scri

bed

matu

rity

peri

od

–su

bje

ct

toth

eappro

val

of

the

RBI


Approval Route –All-in-cost ceilings

All-i

ncost

ceilin

gs

under

the

auto

mati

cro

ute

as

dis

cuss

ed

inSlide

No.

18

for

avera

ge

matu

rity

peri

od

of

3-5

years

and

beyond

5years

are

als

oapplicable

under

the

appro

val

route

Page 2

3


ECB –Calculation of Average Maturity

ABCLtd.-Loanamount–USD2million

Date of drawal/

repayment

(DD/MM/YYYY)

Drawal

Repayment

Balance (Drawal

-repayment)

No. of days**

left with the

borrower

Average maturity (4 x

5)/(2 million x 360)

12

34

56

11-M

ay-0

70.7

5

0.7

5

24

0.0

250

05-J

un-0

70.5

0

1.2

5

85

0.1

476

Page 2

4

05-J

un-0

70.5

0

1.2

5

85

0.1

476

31-A

ug-0

70.7

5

2.0

0

477

1.3

250

27-D

ec-0

80.2

0

1.8

0

180

0.4

500

27-J

un-0

90.2

5

1.5

5

180

0.3

875

27-D

ec-0

90.2

5

1.3

0

180

0.3

250

27-J

un-1

00.3

0

1.0

0

180

0.2

500

27-D

ec-1

00.2

5

0.7

5

180

0.1

875

27-J

un-1

10.2

5

0.5

0

180

0.1

250

27-D

ec-1

10.2

5

0.2

5

180

0.0

625

27-J

un-1

20.2

5

--

**calc

ula

ted u

sing e

xcel fo

rmula

DAYS360 (

firs

t date

, se

cond d

ate

, 360)


Approval Route -Creation of guarantee/security

�Banks,

FIs

,N

BFC

snot

allow

ed

togiv

eany

guara

nte

eor

Lett

er

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dit

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undert

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lett

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com

fort

for

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ty

—C

hoic

e o

f se

curi

ty is

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to t

he b

orr

ow

er

subje

ct

to n

o-o

bje

cti

on f

rom

AD

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reati

on o

f charg

e o

ver

imm

ovable

pro

pert

ies

or

share

s su

bje

ct

to p

resc

ribed c

ondit

ions

Page 2

5

—C

reati

on o

f charg

e o

ver

imm

ovable

pro

pert

ies

or

share

s su

bje

ct

to p

resc

ribed c

ondit

ions

—Is

sue o

f corp

ora

te o

r pers

onal guara

nte

e in f

avor

of

overs

eas

lender

perm

issi

ble


Parking ECB Proceeds abroad

�EC

Bpro

ceeds

for

fore

ign

curr

ency

expendit

ure

may

be

park

ed

overs

eas

or

rem

itte

dto

India

pendin

guti

lizati

on

�EC

Bpro

ceeds

park

ed

overs

eas

perm

itte

dto

be

invest

ed

inth

efo

llow

ing

ass

ets

outs

ide

India

subje

ct

toliquid

ati

on

as

and

when

the

funds

requir

ed

inIn

dia

—D

eposi

tsor

Cert

ific

ate

sof

Deposi

tw

ith

cre

dit

rati

ng

of

at

least

AA-

by

specif

ied

cre

dit

rati

ng

agency

Page 2

6agency

—Tr

easu

rybills

or

moneta

ryin

stru

ments

wit

h1

year

matu

rity

—D

eposi

tsw

ith

overs

eas

bra

nch

of

India

nbanks

�EC

Bfo

rRupee

expendit

ure

tobe

rem

itte

dto

India

imm

edia

tely

and

park

ing

of

pro

ceeds

overs

eas

is

not

all

ow

ed


Refinancing / Prepayment

Refinancingperm

ittedsubjectto

thefollowingconditions:

�Fre

shEC

Bis

rais

ed

at

alo

wer

all

-in-c

ost

(wit

heff

ect

from

1O

cto

ber

2013)

�O

uts

tandin

gm

atu

rity

of

the

ori

gin

al

EC

Bis

main

tain

ed

Prepayments:

Page 2

7

Prepayments:

�Auto

mati

cRoute

-U

pto

USD

500

million

subje

ct

tocom

pliance

wit

hm

inim

um

avera

ge

matu

rity

peri

od

as

applicable

�Appro

valRoute

-Pre

paym

ents

exceedin

gU

SD

500

million


Conversion of ECB into Equity

ConversionofECBinto

equityisperm

ittedsubjectto

thefollowingconditions:

�Acti

vit

yof

the

com

pany

iscovere

dunder

the

Auto

mati

cRoute

for

FD

Ior

Govern

ment

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B)

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valfo

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reig

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on

has

been

obta

ined

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the

com

pany,

where

ver

applicable

�Fore

ign

equit

yaft

er

such

convers

ion

isw

ithin

the

secto

ral

cap

Page 2

8

�Pri

cin

gof

share

sis

as

per

the

pri

cin

gguid

elines

issu

ed

under

FEM

Afo

rlist

ed

/unlist

ed

com

panie

s


Non/optionally/partly convertible Preference Shares

Positionupto

30December2013:

�Is

sue

of

non-c

onvert

ible

,opti

onally

convert

ible

or

part

iall

yconvert

ible

pre

fere

nce

share

ssh

ould

be

inaccord

ance

wit

hth

eguid

elines

applicable

for

EC

B

Positiononorafter30December2013:

Page 2

9

�Subje

ct

toth

epre

scri

bed

condit

ions,

opti

onality

cla

use

sall

ow

ed

incom

puls

ori

lyand

mandato

rily

convert

ible

pre

fere

nce

share

sto

be

issu

ed

toa

pers

on

resi

dent

outs

ide

India

under

the

FD

Isc

hem

e

�As

per

Cir

cula

rN

o.

84

date

d6

January

2014,

an

India

ncom

pany

may

issu

enon-

convert

ible

/re

deem

able

pre

fere

nce

share

sto

non-r

esi

dent

share

hold

ers

by

way

of

dis

trib

uti

on

as

bonus

from

its

genera

lre

serv

es

under

aSchem

eof

Arr

angem

ent

appro

ved

by

aC

ourt

inIn

dia

under

the

pro

vis

ions

of

the

Com

panie

sAct,

as

applicable

,su

bje

ct

tono-o

bje

cti

on

from

the

Incom

eTa

x

Auth

ori

ties


Trade Credits

�Tr

ade

Cre

dit

sm

eans

cre

dit

for

import

sexte

nded

by

the

overs

eas

supplier

(suppliers

’cre

dit

)or

bank

and

financia

lin

stit

uti

on

(buyers

’cre

dit

)

�AD

isauth

ori

zed

toappro

ve

Trade

Cre

dit

sand

report

toth

eRBI

�Tr

ade

Cre

dit

Am

ount

/Eligib

ilit

y-

USD

20

million

per

import

transa

cti

on

Page 3

0

�Tr

ade

Cre

dit

Matu

rity

−C

apit

al G

oods

as

per

fore

ign t

rade p

olicy -

up t

o 5

years

−N

on-c

apit

al goods

–up t

o 1

year

−C

redit

peri

od t

o b

e f

rom

the d

ate

of

ship

ment

�All

-in-c

ost

ceilin

gs

–350 b

asi

s poin

ts o

ver

6 m

onth

s LIB

OR

�AD

can iss

ue L

ett

er

of

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dit

/ G

uara

nte

e /

Lett

er

of

Undert

akin

g o

r C

om

fort

up t

o 3

years

Trade credits for3 years and above are governed by ECB Regulations


FCEB

�FC

EBs

means

—a

bond

expre

ssed

info

reig

ncurr

ency

—th

epri

ncip

al

and

inte

rest

inre

spect

of

whic

his

payable

info

reig

ncurr

ency

—is

sued

by

anIssuingCompany

and

subsc

ribed

toby

apers

on

resi

dent

outs

ide

India

info

reig

n

curr

ency

and

exchangeable

into

equit

ysh

are

of

anoth

er

com

pany

(OfferedCompany)

�Is

suin

gCom

pany

shall

be

part

of

the

pro

mote

rgro

up

of

the

Off

ere

dCom

pany

and

shall

hold

the

equit

ysh

are

sbein

goff

ere

dat

the

tim

eof

issu

ance

of

FC

EB

Page 3

1

equit

ysh

are

sbein

goff

ere

dat

the

tim

eof

issu

ance

of

FC

EB

�O

ffere

dC

om

pany

shall

be

alist

ed

com

pany

whic

his

eligib

leto

receiv

eFD

I,avail

FC

CB

or

EC

B

�Eligib

leSubsc

riber

–Enti

ties

com

ply

ing

wit

hFD

Ipolicy

and

adheri

ng

tose

cto

ral

cap.

Enti

ties

pro

hib

ited

by

SEBIare

not

eligib

leto

subsc

ribe

toFC

EB

AnIndiancompany,whichisnoteligibleto

raisefundsfromtheIndianCapitalMarketincludinga

companywhichhasbeenrestrainedfrom

accessingthesecuritiesmarketbytheSEBIwillnotbe

eligibleto

issueFCEB


FCEB

�FC

EB

issu

ere

quir

es

pri

or

appro

val

of

the

RBI

�End-u

se

�By

issu

ing

com

pany

–O

DIin

WO

S/JV

abro

ad

or

invest

ment

inpro

mote

rgro

up

com

panie

s

�By

pro

mote

rgro

up

com

panie

s–

inaccord

ance

wit

hend-u

ses

pre

scri

bed

under

EC

Bpolicy

�N

ot

all

ow

ed

toin

vest

incapit

al

mark

et

or

real

est

ate

Page 3

2

�N

ot

all

ow

ed

toin

vest

incapit

al

mark

et

or

real

est

ate

�Pri

cin

gof

FC

EB

–th

eexchange

pri

ce

of

the

off

ere

dlist

ed

equit

ysh

are

shall

not

be

less

than

the

hig

her

of

(i)

avera

ge

weekly

hig

h/lo

wof

the

clo

sing

pri

cin

gduri

ng

6m

onth

s(i

i)avera

ge

weekly

hig

h/lo

wof

the

clo

sing

pri

cin

gduri

ng

2w

eeks

�All

-in-c

ost

–as

per

EC

Bpolicy

�Avera

ge

matu

rity

–m

inim

um

5years

�Park

ing

FC

EB

pro

ceeds

abro

ad

–as

per

EC

Bpolicy


FCCB

�FC

CB

means

abond

issu

ed

by

an

India

ncom

pany

expre

ssed

info

reig

ncurr

ency,

and

the

pri

ncip

al

and

inte

rest

inre

spect

of

whic

his

payable

info

reig

ncurr

ency.

�FC

CBs

are

requir

ed

tobe

issu

ed

inaccord

ance

wit

hth

e"IssueofForeignCurrencyConvertible

BondsandOrdinaryShares(ThroughDepositaryReceiptMechanism)Scheme,1993”

and

subsc

ribed

by

anon-r

esi

dent

info

reig

ncurr

ency

and

convert

ible

into

ord

inary

share

sof

the

issu

ing

com

pany

on

the

basi

sof

any

equit

yre

late

dw

arr

ants

att

ached

todebt

inst

rum

ents

Page 3

3

�The

EC

Bpolicy

isapplicable

toFC

CBs

�The

issu

eof

FC

CBs

isals

ore

quir

ed

toadhere

toth

epro

vis

ions

of

FD

I

ECB

Key Compliances

�ObtainingLRN:

—To

ente

rin

tolo

an

agre

em

ent

wit

hth

ere

cognis

ed

lender

for

rais

ing

EC

B

—To

subm

itForm

83

toobta

ina

LRN

from

the

RBIbefo

reavailin

gEC

B

—The

borr

ow

er

can

dra

w-d

ow

nth

elo

an

only

aft

er

obta

inin

gLRN

from

the

RBI

�Monthlyreturns:

Retu

rns

should

be

subm

itte

don

month

lybasi

sw

ithin

7w

ork

ing

days

from

the

clo

seof

the

month

to

Page 3

4

Retu

rns

should

be

subm

itte

don

month

lybasi

sw

ithin

7w

ork

ing

days

from

the

clo

seof

the

month

to

whic

hit

rela

tes

�Changesintheterm

sandconditionsoftheECBafterobtainingLRN:

Pri

or

appro

val

of

AD

bank

isre

quir

ed

for

the

foll

ow

ing:

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hanges/

modif

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ons

inth

edra

wdow

n/re

paym

ent

schedule

—C

hanges

inth

ecurr

ency

of

borr

ow

ing

—C

hange

of

the

AD

bank,

change

inth

enam

eof

the

Borr

ow

er

Com

pany

—C

hange

inth

ere

cogniz

ed

lender

—C

ancell

ati

on

of

LRN

—C

hange

inth

eend-u

seof

EC

Bpro

ceeds

—Reducti

on

inam

ount

of

EC

B

—Reducti

on

inth

eall

-in-c

ost

of

EC

B

ECB

Key Compliances

�ConversionofECBinto

Equity

—Fullconversion:

Report

ing

inForm

FC

-GPR

toth

eRegio

nal

Off

ice

concern

ed

of

the

RBI

as

well

as

inForm

EC

B-2

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eD

SIM

,RBIw

ithin

7w

ork

ing

days

from

the

clo

seof

month

tow

hic

hit

rela

tes

—Partialconversions:

Page 3

5Report

ing

inForm

FC

-GPR

toth

eRegio

nal

Off

ice

concern

ed

as

well

as

inForm

EC

B-2

cle

arl

y

dif

fere

nti

ati

ng

the

convert

ed

port

ion

from

the

unconvert

ed

port

ion

toth

eD

SIM

,RBI

wit

hin

7w

ork

ing

days

from

the

clo

seof

month

tow

hic

hit

rela

tes

LENDING IN FOREIGN CURRENCY

LENDING IN FOREIGN CURRENCY

Lending by persons other than AD

Lending by an AD

LENDING IN FOREIGNCURRENCY

Lending by an AD

AnADoritsoverseasbranchcanlendinforeigncurrencyinthefollowingcases

�Exte

ndin

gcre

dit

facilit

yto

overs

eas

WO

Sor

JV

of

an

India

nenti

typro

vid

ed

at

least

51%

of

equit

yis

held

by

the

India

nenti

tyand

subje

ct

tocondit

ions

pre

scri

bed

inovers

eas

invest

ment

regula

tions

�O

vers

eas

bra

nch

of

AD

can

gra

nt

loans

again

stse

curi

tyof

funds

held

inN

RE/FC

NR

deposi

taccounts

�An

AD

can

gra

nt

loans

again

stse

curi

tyof

funds

held

inFC

NR

accounts

toth

eaccount

hold

er

Page 3

8

�An

AD

can

gra

nt

loans

again

stse

curi

tyof

funds

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inFC

NR

accounts

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eaccount

hold

er

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ct

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eguid

elines

issu

ed

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the

RBI

�O

vers

eas

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of

AD

can

gra

nt

loans

inth

enorm

al

cours

eof

bankin

gbusi

ness

outs

ide

India

�An

AD

can

gra

nt

loan

toit

sconst

ituents

inIn

dia

(i)

for

meeti

ng

their

fore

xre

quir

em

ents

(ii)

again

stse

curi

tyof

funds

held

inRFC

account

subje

ct

toth

eguid

elines

issu

ed

by

the

RBI

�An

AD

can

gra

nt

loan

toanoth

er

AD

subje

ct

toth

eguid

elines

issu

ed

by

the

RBI

LENDING IN FOREIGNCURRENCY

Lending by persons other than AD

�An

India

nenti

tycan

lend

toit

sW

OS/JV

abro

ad

const

itute

din

accord

ance

wit

hovers

eas

invest

ment

regula

tions

�A

pers

on

resi

dent

inIn

dia

can

lend

toit

sovers

eas

import

er

cust

om

er

for

trade

rela

ted

purp

ose

sout

of

funds

held

inEEFC

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Incase

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loan

exceedin

gU

SD

1,0

0,0

00

the

borr

ow

er

should

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vid

e

guara

nte

eof

abank

of

inte

rnati

onal

repute

outs

ide

India

�In

dia

ncom

panie

scan

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nt

loan

toem

plo

yees

of

their

bra

nches

outs

ide

India

for

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onal

purp

ose

pro

vid

ed

the

loan

should

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inaccord

ance

wit

hth

ele

nder’

sSta

ffW

elf

are

Schem

e/lo

an

rule

sand

Page 3

9

pro

vid

ed

the

loan

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inaccord

ance

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hth

ele

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ffW

elf

are

Schem

e/lo

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rule

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oth

er

term

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condit

ions

applicable

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sem

plo

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resi

dent

inIn

dia

and

outs

ide

India

�Fore

ign

curr

ency

loans

can

be

exte

nded

by

EXIM

,ID

BI,

IFC

I,IC

ICI,

SID

BI

or

any

oth

er

inst

ituti

on

in

India

toth

eir

const

ituents

out

of

fore

ign

curr

ency

borr

ow

ings

rais

ed

by

them

wit

hth

eappro

val

of

the

Centr

al

Govern

ment

for

the

purp

ose

of

onw

ard

lendin

g

BORROWING IN RUPEES

BORROWING IN RUPEES

Borrowing by an Indian company from NRI or PIO

Borrowing by person other than an Indian company from

NRI or PIO

Page 4

1

End use restrictions

BORROWING IN RUPEES

By person other than Indian company

�A

pers

on

resi

dent

inIn

dia

(oth

er

than

com

pany)

can

borr

ow

inru

pees

on

non-r

epatr

iati

on

basi

s

from

NRIor

PIO

resi

dent

outs

ide

India

subje

ct

toth

efo

llow

ing

condit

ions:

—Loan

should

be

receiv

ed

eit

her

by

way

of

�re

mit

tance

from

outs

ide

India

or

�out

of

NRE

/N

RO

/FC

NR

/N

RN

R*

/N

RSR*

account

of

the

lender

main

tain

ed

wit

hAD

bank

inIn

dia

Page 4

2

—Peri

od

of

loan

shall

not

exceed

3years

—Rate

on

inte

rest

on

the

loan

shall

not

exceed

2%

over

the

bank

rate

pre

vailin

gon

the

date

of

availin

gof

loan.

Pre

sent

PLR

is14.7

5%

—Borr

ow

ed

am

ount

shall

not

be

all

ow

ed

tobe

repatr

iate

douts

ide

India

—In

case

of

borr

ow

ing

out

of

funds

held

inN

RSR

account,

paym

ent

of

inte

rest

and

repaym

ent

of

loan

shall

be

made

by

cre

dit

toN

RSR

account.

Inoth

er

case

s,re

paym

ent

of

loan

shall

be

made

by

cre

dit

toN

RO

or

NRSR

account.

Inte

rest

isre

patr

iable

incase

of

NRO

account

*NRSR and NRNR accounts discontinued since1 April 2002

BORROWING IN RUPEES

By an Indian company

�An

India

ncom

pany

can

borr

ow

inru

pees

on

repatr

iati

on

or

non-r

epatr

iati

on

basi

sfr

om

NRI

or

PIO

resi

dent

outs

ide

India

by

way

ofissueofNCDs

subje

ct

tofo

llow

ing

condit

ions:

—Public

off

er

for

issu

eof

NC

D

—Rate

on

inte

rest

shall

not

exceed

PLR

of

SBI

+3%

.PLR

should

be

taken

as

on

the

date

of

reso

luti

on

appro

vin

gth

eis

sue

—Redem

pti

on

peri

od

should

not

be

less

than

3years

Page 4

3

—Redem

pti

on

peri

od

should

not

be

less

than

3years

—Borr

ow

ing

com

pany

should

report

deta

ils

of

receip

tof

rem

itta

nce

for

invest

ment

inN

CD

sand

issu

eof

NC

Ds

wit

hin

30

days

toth

eRBI

—In

vest

ment

should

be

receiv

ed

eit

her

by

way

of

�re

mit

tance

from

outs

ide

India

or

�out

of

NRE

/FC

NR

account

of

the

invest

or

main

tain

ed

wit

hAD

bank

inIn

dia

—In

case

of

borr

ow

ing

by

way

issu

eof

NC

Ds

on

repatr

iati

on

basi

s,th

eperc

enta

ge

of

NC

Ds

issu

ed

toN

RIto

the

tota

lpaid

up

valu

eof

each

seri

es

of

NCD

sis

sued

should

not

exceed

the

pre

scri

bed

ceilin

gfo

ris

sue

of

equit

ysh

are

s/

convert

ible

debentu

res

as

per

FD

IRegula

tions

BORROWING IN RUPEES

Restriction on use of borrowed funds

�For

uti

lizati

on

inbusi

ness

oth

er

than

borr

ow

er’

sow

nbusi

ness

,w

hic

hsp

ecif

ically

exclu

des

the

foll

ow

ing

acti

vit

ies

(“pro

hib

ited

acti

vit

ies”

)

—Busi

ness

of

chit

fund

—As

Nid

hicom

pany

—Agri

cult

ura

lor

pla

nta

tion

acti

vit

ies

or

real

est

ate

busi

ness

*or

const

ructi

on

of

farm

house

—Tra

din

gin

TD

Rs

*Real

est

ate

busi

ness

not

toin

clu

de

develo

pm

ent

of

tow

nsh

ips,

const

ructi

on

or

resi

denti

al/

com

merc

ial

pre

mis

es,

roads

or

bri

dges

Page 4

4

roads

or

bri

dges

�For

any

invest

ment

(by

way

of

capit

al

or

oth

erw

ise)

inany

com

pany

or

part

ners

hip

firm

or

pro

pri

eta

ryconcern

or

any

enti

ty

�For

rele

ndin

g

How

ever,

the

RBIm

ay

perm

itre

sidents

/com

panie

sto

use

the

borr

ow

ed

funds

for

—O

n-l

endin

g/re

-lendin

gto

the

infr

ast

ructu

rese

cto

r

—Keepin

gin

fixed

deposi

tsw

ith

India

nbanks

pendin

guti

lizati

on

for

perm

issi

ble

end-u

se

The above restrictions apply to company as well as personother

than company

LENDING IN RUPEES

LENDING IN RUPEES

Lending to NRI or PIO employees by Indian body corporate

Housing loan to NRI / PIO

Lending by an AD to NRI employee for ESOP

Lending by an AD to NRI

Change in residential status

Lending to NRI relative by resident individual

Repayment of loan by relatives

LENDING IN RUPEES

Lendingby an AD to NRI

Rupee

lendin

gby

an

AD

toN

RIis

perm

issi

ble

:

�Again

stth

ese

curi

tyof

share

sor

oth

er

securi

ties

held

innam

eof

the

borr

ow

er

or

�Again

stth

ese

curi

tyof

imm

ovable

pro

pert

y

�For

any

purp

ose

as

per

the

policy

of

AD

Subje

ct

toth

efo

llow

ing

condit

ions:

—U

tilizati

on

of

borr

ow

ed

funds

should

be

for

meeti

ng

borr

ow

er’

spers

onal

requir

em

ents

/his

ow

n

Page 4

7

—U

tilizati

on

of

borr

ow

ed

funds

should

be

for

meeti

ng

borr

ow

er’

spers

onal

requir

em

ents

/his

ow

n

busi

ness

purp

ose

—The

loan

should

not

be

uti

lized

(sin

gly

or

inass

ocia

tion

wit

hoth

er

pers

on)

for

the

pro

hib

ited

acti

vit

ies

—RBI’

sdir

ecti

ves

on

such

advances

should

be

com

plied

wit

h

—The

loan

am

ount

should

not

be

cre

dit

ed

toN

RE,

FC

NR

or

NRN

Raccount

of

the

NRIborr

ow

er

—The

loan

am

ount

should

not

be

rem

itte

douts

ide

India

—Repaym

ent

of

loan

should

be

(i)

by

way

of

inw

ard

rem

itta

nces

or

(ii)

by

debit

toN

RO

/N

RE/FC

NR

account

of

the

borr

ow

er

or

(iii)

out

of

sale

pro

ceeds

of

the

securi

tyagain

stw

hic

hlo

an

was

gra

nte

d

LENDING IN RUPEES

Lendingby an AD to NRI employees for ESOP

An

AD

can

gra

nt

rupee

loans

toN

RI

em

plo

yees

of

India

ncom

panie

sfo

racquir

ing

share

sunder

ESO

P

schem

esu

bje

ct

toth

efo

llow

ing

condit

ions:

�The

ESO

Psc

hem

esh

ould

be

as

per

the

policy

appro

ved

by

the

AD

’sBoard

�The

loan

am

ount

should

not

exceed

low

er

of

the

foll

ow

ing:

—90%

of

the

purc

hase

pri

ce

of

the

share

sor

Page 4

8

—90%

of

the

purc

hase

pri

ce

of

the

share

sor

—IN

R20

lacs

per

NRIem

plo

yee

�The

am

ount

should

be

paid

dir

ectl

yto

the

com

pany

and

not

toth

eem

plo

yees

�Repaym

ent

of

loan

should

be

by

way

of

inw

ard

rem

itta

nces

or

by

way

of

debit

toborr

ow

er’

s

NRO

/N

RE/FC

NR

account

�The

loan

should

be

inclu

ded

inre

ckonin

gcapit

al

mark

et

exposu

res

and

the

AD

should

ensu

re

com

pliances

wit

hpru

denti

allim

its

pre

scri

bed

by

the

RBI

LENDING IN RUPEES

Housing loanto NRI or PIO

An

AD

or

aH

ousi

ng

Fin

ance

Inst

ituti

on

(appro

ved

by

NH

B)

can

pro

vid

ehousi

ng

loan

toa

NRI

or

PIO

resi

dent

outs

ide

India

for

acquis

itio

nof

resi

denti

al

accom

modati

on

inIn

dia

subje

ct

toth

efo

llow

ing

condit

ions:

�The

quantu

mof

loan,

marg

inm

oney

and

peri

od

of

repaym

ent

should

be

at

par

wit

hth

ehousi

ng

loan

pro

vid

ed

tore

sident

India

n

�The

loan

am

ount

should

not

be

cre

dit

ed

toN

RE

or

FC

NR

account

of

the

borr

ow

er

Page 4

9

�The

loan

should

be

fully

secure

dby

equit

able

mort

gage

of

the

pro

pert

yor

oth

er

ass

ets

,w

here

ver

requir

ed

�Repaym

ent

of

loan

(inclu

din

gin

tere

stand

oth

er

charg

es)

should

be

—by

way

of

inw

ard

rem

itta

nces

or

by

way

of

debit

toborr

ow

er’

sN

RO

/N

RE/FC

NR

account

—O

ut

of

renta

lin

com

ederi

ved

from

the

pro

pert

y(f

or

whic

hhousi

ng

loan

was

availed)

�The

rate

of

inte

rest

should

confi

rmto

the

dir

ecti

ves

of

RBI/

NH

Bas

the

case

may

be

LENDING IN RUPEES

Repayment of loan by relatives

Loan

gra

nte

dto

NRI

by

an

AD

(inclu

din

ghousi

ng

loan

by

AD

/H

ousi

ng

Fin

ance

Inst

ituti

on

toN

RI/

PIO

)can

be

repaid

by

any

rela

tive

of

the

borr

ow

er

resi

dent

inIn

dia

by

�C

redit

ing

the

borr

ow

er’

slo

an

account

or

�Thro

ugh

the

bank

account

of

such

rela

tive

The

word

‘rela

tive’

shall

mean

‘rela

tive’

as

defi

ned

inth

eC

om

panie

sAct

Page 5

0

The

word

‘rela

tive’

shall

mean

‘rela

tive’

as

defi

ned

inth

eC

om

panie

sAct

LENDING IN RUPEES

To NRI or PIO employees of Indian body

corporate

Abody

corp

ora

tere

gis

tere

dor

incorp

ora

ted

inIn

dia

can

gra

nt

rupee

loans

toit

sN

RI/

PIO

em

plo

yees

subje

ct

toth

efo

llow

ing

condit

ions:

�The

loan

should

be

only

for

pers

onal

purp

ose

sin

clu

din

gpurc

hase

of

housi

ng

pro

pert

yin

India

�The

loan

should

be

inaccord

ance

wit

hth

ele

nder’

sSta

ffW

elf

are

Schem

e/Sta

ffH

ousi

ng

Schem

e

and

oth

er

term

s&

condit

ions

applicable

toit

sem

plo

yees

resi

dent

inIn

dia

Page 5

1

�The

loan

should

not

be

uti

lized

for

the

pro

hib

ited

acti

vit

ies

�The

loan

am

ount

should

be

cre

dit

ed

toth

eborr

ow

er’

sN

RO

account

inIn

dia

�Repaym

ent

of

loan

should

be

way

of

inw

ard

rem

itta

nces

or

by

way

of

debit

toborr

ow

er’

s

NRO

/N

RE/FC

NR

account

�The

loan

agre

em

ent

should

conta

inappro

pri

ate

cla

use

toth

iseff

ect

LENDING IN RUPEES

To NRI relative by resident individual

Are

sident

indiv

idual

can

gra

nt

loan

toa

NRI

rela

tive

by

way

of

acro

ssed

cheque/ele

ctr

onic

transf

er

subje

ct

toth

efo

llow

ing

condit

ions:

�It

should

be

inte

rest

-fre

e

�M

inim

um

matu

rity

of

the

loan

should

be

1year

�The

loan

should

be

wit

hin

the

overa

lllim

itof

USD

75,0

00

per

financia

lyear

as

per

the

LRS

�End-u

sesh

ould

be

for

borr

ow

er’

spers

onal

requir

em

ents

or

for

his

ow

nbusi

ness

inIn

dia

Page 5

2

�End-u

sesh

ould

be

for

borr

ow

er’

spers

onal

requir

em

ents

or

for

his

ow

nbusi

ness

inIn

dia

�The

loan

should

not

be

uti

lized

(sin

gly

or

inass

ocia

tion

wit

hoth

er

pers

on)

for

the

pro

hib

ited

acti

vit

ies

�The

loan

am

ount

should

be

cre

dit

ed

toth

eborr

ow

er’

sN

RO

account

inIn

dia

�The

loan

am

ount

should

not

be

rem

itte

douts

ide

India

�Repaym

ent

of

loan

should

be

(i)

by

way

of

inw

ard

rem

itta

nces

or

(ii)

by

debit

toN

RO

/N

RE/FC

NR

account

of

the

borr

ow

er

or

(iii)

out

of

sale

pro

ceeds

of

the

securi

tyagain

stw

hic

hlo

an

was

gra

nte

d

LENDING IN RUPEES


Residentborrowerbecomingnon-resident

An

AD

can

allow

conti

nuance

of

loan/overd

raft

gra

nte

dto

apers

on

resi

dent

inIn

dia

who

subse

quentl

y

becom

es

non-r

esi

dent

subje

ct

toth

efo

llow

ing

condit

ions:

�AD

should

be

sati

sfie

dabout

the

reaso

ns

toconti

nue

the

loan/overd

raft

�The

peri

od

of

loan

(as

fixed

ori

gin

all

y)

should

not

change

Page 5

3

�The

peri

od

of

loan

(as

fixed

ori

gin

all

y)

should

not

change

�As

long

as

the

borr

ow

er

conti

nues

tore

main

pers

on

outs

ide

India

,re

paym

ent

of

loan

should

be

—by

way

of

inw

ard

rem

itta

nces

or

—by

debit

toN

RO

/N

RE/FC

NR

account

of

the

borr

ow

er

LENDING IN RUPEES


Residentlenderbecomingnon-resident

Incase

are

sident

lender

havin

gadvanced

loan

toa

pers

on

resi

dent

inIn

dia

,becom

es

non-r

esi

dent,

the

repaym

ent

of

loan

by

the

resi

dent

borr

ow

er

should

be

by

way

of

cre

dit

toN

RO

account

of

the

lender

Page 5

4

FAQs

FAQs

�W

heth

er

loan

can

be

gra

nte

dunder

LRS?

�C

an

an

indiv

idual,

who

has

availed

of

alo

an

abro

ad

while

as

aN

RI

repay

the

sam

eon

retu

rnto

India

,under

LRS

as

are

sident?

�C

an

NRI

/PIO

avail

of

loan

from

an

auth

ori

sed

deale

rfo

racquir

ing

flat

/house

inIn

dia

for

his

ow

n

resi

denti

aluse

again

stth

ese

curi

tyof

funds

held

inhis

NRE

Fix

ed

Deposi

taccount

/FC

NR

account?

Page 5

6

�C

an

NRI

/PIO

,avail

of

housi

ng

loan

inRupees

from

an

AD

or

Housi

ng

Fin

ance

Inst

ituti

on

for

purc

hase

of

resi

denti

al

accom

modati

on

or

for

the

purp

ose

of

repair

s/

renovati

on

/im

pro

vem

ent

of

resi

denti

alaccom

modati

on?

�C

an

NRI/

PIO

avail

of

housi

ng

loan

inRupees

from

his

em

plo

yer

inIn

dia

�If

aRupee

loan

was

taken

by

the

NRI/

PIO

from

an

AD

or

Housi

ng

Fin

ance

Inst

ituti

on

for

purc

hase

of

resi

denti

alpro

pert

ycan

the

NRI/

PIO

repatr

iate

the

sale

pro

ceeds

of

such

pro

pert

y?

FAQs

�C

an

an

indiv

idualre

sident

lend

money

tohis

clo

sere

lati

ve

NRI/

PIO

?

�C

an

an

indiv

idualre

sident

repay

loans

of

clo

sere

lati

ve

NRIs

tobanks

inIn

dia

?

�C

an

an

India

nPart

yexte

nd

loan

or

guara

nte

eto

an

overs

eas

enti

tyw

ithout

any

equit

ypart

icip

ati

on

inth

at

enti

ty?

�W

heth

er

equit

yin

vest

ment

inovers

eas

WO

S/JV

can

be

convert

ed

into

loan

or

oth

er

form

sof

Page 5

7

�W

heth

er

equit

yin

vest

ment

inovers

eas

WO

S/JV

can

be

convert

ed

into

loan

or

oth

er

form

sof

funded

exposu

relike

pre

fere

nce

capit

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Borrowing and Lending in Rupees Foreign Currency-220414-Final… · · 2017-09-08BORROWING IN...

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Transcript of Borrowing and Lending in Rupees Foreign Currency-220414-Final… · · 2017-09-08BORROWING IN...