Regulation 5 - Borrowing and Lending in Foreign Exchange by persons other than authorised dealer - Foreign Exchange Management (Borrowing or Lending In Foreign Exchange ) Regulations, 2000

5. Borrowing and Lending in Foreign Exchange by persons other than authorised dealer:- (1) An Indian entity may lend in foreign exchange to its wholly owned subsidiary or joint venture abroad constituted in accordance with the provisions of Foreign Exchange Management (Transfer or issue of foreign security) Regulations, 2000. (2) A person resident in India may borrow, whether by way of loan or overdraft or any other credit facility, from a bank situated outside India, for execution outside India of a turnkey project or civil construction contract or in connection with exports on deferred payment terms, provided the terms and conditions stipulated by the authority which has granted the approval to the project or contract or export in accordance with the Foreign Exchange Management (Export of goods and services) Regulations, 2000. (3) An importer in India may, for import of goods into India, avail of foreign currency credit for a period not exceeding six months extended by the overseas supplier of goods, provided the import is in compliance with the Export Import Policy of the Government of India in force. (4) A person resident in India may lend in foreign currency out of funds held in his EEFC account, for trade related purposes to his overseas importer customer: 3 Provided that where the amount of loan exceeds US $ 100,000, a guarantee of a bank of international repute situated outside India is provided by the overseas borrower in favour of the lender. (5) Foreign currency loans may be extended by Export Import Bank of India, Industrial Development Bank of India, Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India Limited, Small Industries Development Bank of India Limited. or any other institution in India to their constituents in India out of foreign currency borrowings raised by them with the approval of the Central Government for the purpose of onward lending. 1 (6) An individual resident in India may borrow a sum not exceeding US $ 250,000/- or its equivalent form his close relatives outside India, subject to the conditions that- (a). the minimum maturity period of the loan is none year; (b). the loan is free of interest; and (c). the amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debits to the NRE/FCNR account of the non-resident lender. Explanation: - ''Close relative' means relative as defined in Section 6 of the Companies Act, 1956. 2 (7) Indian companies in India may grant loans in foreign currency to the employees of their branches outside India for personal purposes provided that the loan shall be granted for personal purposes in accordance with the lender's Staff Welfare Scheme/Loan Rules and other terms and conditions as applicable to its staff resident in India and abroad. **************************** Note : 1. Has been inserted vide Notification No. 075/2002 dated 1/11/2002 2. Has been inserted vide Notification No. 80/2003 dated 8/1/2003 3. Has been substituted vide Notification No. 112/2004 dated 6/3/2004 , before it was read as, Provided that,- a) the aggregate amount of such loans outstanding at any point of time does not exceed US$ 3 million; and b) where the amount of loan exceeds US$ 25,000, a guarantee of a bank of international repute situated outside India is provided by the overseas borrower in favour of the lender .