Section 8 in The Foreign Exchange Management (Borrowing And Lending In Rupees) Regulations, 2000
8. Providing housing loan in rupees to a non-resident .-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 the following conditions, namely:-
(a)the quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;(b)the loan amount shall not be credited to Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR) account of the borrower;(c)the loan shall be fully secured by equitable mortgage of the property proposed to be acquired, and if necessary, also by lien on the borrower's other assets in India;(d)the instalment of loan, interest and other charges, if any, shall be paid by the borrower by remittances from outside India through normal banking channels or out of funds in his Non-resident External (NRE)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Ordinary (NRO)/Non-resident Special Rupee (NRSR) account in India, or out of rental income derived from renting out the property acquired by utilisation of the loan [or by any relative of the borrower in India by crediting the borrower's loan account through the bank account of such relative.Explanation .-The word "relative" means "relative" as defined in section 6 of the Companies Act, 1956;] [ Inserted by G.S.R. 711(E), dated 18.9.2007 (w.r.e.f. 22.8.2007).](e)the rate of interest on the loan shall conform to the directives issued by the Reserve Bank or, as the case may be, by the National Housing Bank.[8-A. 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:--(i)the loan shall be granted only for personal purposes including purchase of housing property in India;(ii)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;(iii)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;(iv)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;(v)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.][8B. Rupee loans to non-resident Indian by Resident - A resident individual may grant loan to a NRI relative by way of crossed cheque/electronic transfer:Provided that:(i)the loan is free of interest and the minimum maturity of the loan is one year;(ii)the loan amount should be within the overall limit under the Liberalised Remittance Scheme 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 limits prescribed under Liberalised Remittance Scheme during the financial year;(iii)the loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes in India;(iv)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;(a)the business of chit fund, or(b)Nidhi Company, or(c)agricultural or plantation activities or in real estate business, or construction of farm houses, or(d)trading in Transferable Development Rights (TDRs).Explanation: For the purpose of item (c) above, real estate business shall not include development of townships, construction of residential/commercial premises, roads or bridges.(v)The loan amount should be credited to the NRO a/c of the NRI/PIO. Credit of such loan amount may be treated as an eligible credit to NRO a/c;(vi)the loan amount shall not be remitted outside India; and(vii)repayment of loan shall be made by way of inward remittances through normal banking channels or by debit lo the Non-resident Ordinary (NRO)/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.]
