Reserve Bank of India has granted general permission w.e.f. March 30, 1999 to the Resident Indian / proprietorship / partnership firms to avail of interest bearing rupee loans from NRIs/PIOs on non repatriable basis. This permission is subject to compliance with the following conditions,

1. The rate of interest of such loans should not exceed 2 percentage points over the Bank Rate prevailing on the date of granting the loan.

2. The maturity period of the loan should not exceed 3 years.

3. The loan can be granted out of funds remitted from abroad in foreign exchange through normal banking or out of NRE/FCNR/NRO/NRSR accounts maintained with authorised dealers in India. The payment of interest /repayment of loans should be made by credit to NRO/NRSR accounts of the Non Resident lender.

   In case where the loan was granted out of funds held in NRSR account of the lender, the repayment of loan or repayment of interest should be made by credit to NRSR accounts of the lender.

4. The principal amount of the loan will not be repatriable.

5. The loan can not be raised for the purpose of carrying out agricultural/plantation activity or for purchase of immovable property /shares/debentures / bonds or for re-lending.