Subject to the directions issued by the Reserve Bank from time to time in this regard, an authorised dealer in India may grant loan to a non-resident Indian, (A) against the security of shares or other securities held in the name of the borrower, or
(B) against the security of immovable property (other than agricultural or plantation property or farm house), held by him in accordance with the Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulations, 2000 :
(a) the loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes; and
(b) the loan shall not be utilised, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely;
(i) the business of chit fund, or
(ii) Nidhi Company, or
(iii) agricultural or plantation activities or in real estate business, or construction of farm houses; or
(iv) trading in Transferable Development Rights (TDRs).
For the purpose of item (iii) of proviso, real estate business shall not include development of townships, construction of residential/commercial premises, roads or bridges.
(c) the Reserve Bank's directives on advances against shares/ securities /immovable property shall be duly complied with;
(d) the loan amount shall not be credited to Non-resident External (NRE)/Non-resident Ordinary (NRO)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR) account of the borrower;
(e) the loan amount shall not be remitted outside India;
(f) repayment of loan shall be made from out of remittances from outside India through normal banking channels or by debit to the Non-resident Ordinary (NRO)/Non-resident Special Rupee (NRSR)/Non-resident Non-repatriable (NRNR)/Non-resident External (NRE)/Foreign Currency Non-resident (FCNR) account of the borrower or out of the sale proceeds of the shares or securities or immovable property against which such loan was granted
#LawyerServices #Section #Act #Law #Statute #IndianLaw #Kanoon