Regulation 6 - Restriction on use of borrowed funds - Foreign Exchange Management (Borrowing And Lending In Rupees) Regulations, 2000

6. Restriction on use of borrowed funds:- No person resident in India who has borrowed in rupees from a person resident outside India,- (1) shall use such borrowed funds for any purpose except in his own business other than - (i) the business of chit fund, or (ii) as Nidhi Company , or (iii) agricultural or plantation activities or real estate business; or construction of farm houses or (iv) trading in Transferable Development Rights (TDRs). (2) shall use such borrowed funds for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not, or for relending. 1 [ Provided that the Reserve Bank may permit such resident entities / companies to use such borrowed funds: (a) for on lending / re-lending to the infrastructure sector; or (b) for keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses ] Explanation: For the purpose of sub-clause (iii) of clause (1), real estate business shall not include development of townships, construction of residential/ commercial premises, roads or bridges. ------------------ Notes:- 1. Inserted vide Notification No.FEMA. 287/2013-RB, dated September 17, 2013