Reserve Bank of India has allowed authorised dealers to grant rupee loans to non-resident Indians for purposes other than those specifically prohibited by the central bank.
The ADs can grant such loans as per the bank's policy but must ensure that proceeds of the loans are not utilised for chit fund, or agricultural or plantation activities or in real estate business, or construction of farm houses, or trading in transferable development rights, or investment in capital market including margin trading and derivatives, RBI said in a notification in Mumbai on Thursday.
The central bank conducted a review of the norms after receiving representations from ADs.
Currently, ADs are allowed to grant loans in rupees to NRIs against the security of shares or immovable property in India for personal or business purposes and housing loans against the security of houses/flats to be acquired for acquisition of residential accommodation in India.
RBI said the repayment should be made by debit to NRE/FCNR/NRO (non-resident external/foreign currency non-resident/non-resident ordinary rupees) accounts or out of inward remittances of the borrowers.
The quantum of loan, rate of interest and margins on such loans must be decided by the ADs based on relevant directives issued by the Department of Banking Operations and Development in this regard, it added.
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