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Question ID : 38074

LOAN FROM NRI DIRECTOR TO A PRIVATE LIMITED COMPANY ON NON REPATRIABLE BASIS

A private limited company wants to avail loan in USD from its NRI director for working capital requirement. Loan is being availed on non repatriable basis and hence the company will repay the loan to the NRI Director in INR. can the company avail loan in such a manner. what would be the consequences under FEMA and Comapnies Act ??

Posted by SRIMANTH KULKARNI on Apr 03, 2019

Filed Under Companies Act, 2013

Answer ID : 76452

It is better that the NRI director transfer the loan to Company from his/her NRO account. He can transfer funds to NRO account in foreign currency if funds are not there. Since the company is getting loan in INR. Hence most of the questions will not arise.

Posted by CA. JHA SHANKAR KUMAR on Apr 03, 2019
Answer ID : 76468

An Indian entity can borrow up to US$ five million or its equivalent from an NRI. Such loan can be used only for corporate purpose. The minimum maturity of such loans should be three years. An Indian entity can also borrow up to US$ ten million or its equivalent from an NRI, but in such cases, it is only for limited purposes: 1.Borrowing for Financing of Infrastructure Projects: 2. Borrowings by Exporter/Foreign Exchange Earner: 3. Long-term Borrowings:

Posted by CA. BISHT RAKESH on Apr 06, 2019