Resident individuals are now permitted to lend to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to the following conditions :

• The loan should be free of interest and the minimum maturity of the loan should be one year;
• The loan amount should be within the overall limit under the Liberalized Remittance Scheme of USD 200,000 per financial year available for a resident individual. It would be the responsibility of the lender to ensure that the amount of loan is within the Liberalized Remittance Scheme limit of ,USD 200,000 during the financial year.
• The loan would have to be utilized for meeting the borrower’s personal requirements or for his own business purposes in India.
• The loan should not be utilized, either singly or in association with other person, for any of the activities in which investment by persons resident outside India is prohibited, namely,
  • The business of chit fund, or
  • Nidhi Company, or
  • Agricultural or plantation activities or in real estate business (excluding development of townships, construction of residential / commercial premises, roads or bridges) or construction of farm houses, or
  • Trading in Transferable Development Rights (TDRs).
• The loan amount would have to be credited to the NRO account of the NRI/PIO;
• The loan amount should not be remitted outside India; and
• The loan should be repaid by way of inward remittances through normal banking channels or by debit to the Non-resident Ordinary (NRO) / Non-resident External (NRE) f-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.