Section 4 in The Foreign Exchange Management (Borrowing And Lending In Rupees) Regulations, 2000
4. Borrowing in rupees by persons other than companies in India .-A person resident in India, not being a company incorporated in India, may borrow in rupees on non-repatriation basis from a non-resident Indian or a person of Indian origin resident outside India, subject to the following conditions:-
(i)the amount of loan shall be received by way of inward remittance from outside India or out of Non-resident External (NRE)/Non-resident Ordinary (NRO)/Foreign Currency Non-resident (FCNR)/Non-resident Non-repatriable (NRNR)/Non-resident Special Rupee (NRSR) account of the lender maintained with an authorised dealer or an authorised bank in India,(ii)the period of loan shall not exceed three years;(iii)the rate of interest on the loan shall not exceed two percentage points over the Bank rate prevailing on the date of availment of loan;(iv)where the loan is made out of funds held in Non-resident Special Rupee (NRSR) account of the lender, payment of interest and repayment of loan shall be made by credit to that account; and in other cases, payment of interest and repayment of loan shall be made by credit to the lender's Non-resident Ordinary (NRO) or Non-resident Special Rupee (NRSR) account as desired by the lender; and(v)the amount borrowed shall not be allowed to be repatriated outside India.
