Residents Can Offer Interest-Free Loans to NRI/PIO Relatives Under Specific Conditions; Must Follow Remittance and Usage Rules
A resident individual can provide a rupee loan to a NRI/PIO close relative via crossed cheque or electronic transfer under specific conditions. The loan must be interest-free with a minimum maturity of one year and within the Liberalised Remittance Scheme limit of USD 250,000 per financial year. The loan should be used for personal or business purposes in India and not for prohibited activities like chit funds, Nidhi Companies, certain agricultural activities, or real estate business. The loan must be credited to the borrower's NRO account and cannot be remitted outside India. Repayment should occur through specific banking channels or accounts.
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