FEMA
FEMA Advisory – Borrowing, Property & Banking Rules for NRIs
By Classic Partner – Chartered Accountants for FEMA & NRI Compliance
At Classic Partner, we guide NRIs, OCIs, and Resident Indians through the complex rules of borrowing, lending, property transactions, and NRI banking under the Foreign Exchange Management Act (FEMA), 1999.
Our FEMA experts ensure every transaction is legally compliant, tax-efficient, and properly documented—whether you’re borrowing from abroad, buying property in India, or repatriating funds.
Borrowing & Lending Rules under FEMA
The FEMA (Borrowing & Lending) Regulations, 2018 govern all borrowing and lending transactions in INR and foreign currency.
Borrowing by NRIs in Indian Rupees (INR)
From Indian Banks – for personal needs, business, housing, or vehicles.
From Resident Relatives – up to USD 250,000 per year (LRS limit), interest-free and non-repatriable.
From NBFCs/Housing Finance Companies – for property or vehicle purchase.
From Employers in India – under staff welfare schemes.
Borrowing by NRIs in Foreign Currency
Permitted only from overseas branches of Indian banks, against NRE/FCNR deposits.
Cannot borrow directly from resident individuals without RBI approval.
Borrowing by Resident Indians
From NRI/OCI Relatives – up to USD 250,000, interest-free, routed via NRE/NRO/FCNR accounts.
Students abroad can raise loans up to USD 250,000 for education.
Restricted Uses of Borrowed Funds
Funds cannot be used for chit funds, agricultural land, plantation, real estate trading, margin trading, or TDRs.
Property Transactions by NRIs/OCIs under FEMA
NRIs/OCIs can:
Buy residential & commercial property (unlimited).
Not allowed to buy agricultural land, plantation, or farmhouses (can only inherit/receive as gift).
Sell property to residents, NRIs, or OCIs (with conditions).
Fund purchases through inward remittance, NRE/NRO/FCNR accounts, or Indian housing loans.
Special cases:
Joint purchase with resident spouse allowed under conditions.
Foreign embassies & LTV holders have restricted permissions.
Tip by Classic Partner: Always retain FIRC, loan repayment, and bank remittance proofs for future repatriation.
NRI Bank Accounts – FEMA-Compliant Options
Managing finances in India starts with the right account type:
NRO Account – For Indian Income
INR account for rent, dividends, pensions, or local income.
Repatriation up to USD 1 million per year (after taxes).
Interest taxable in India (TDS applies).
NRE Account – For Foreign Income
Fully repatriable account, tax-free interest in India.
Suitable for NRIs wanting free movement of funds abroad.
FCNR (B) Account – For Foreign Currency Deposits
Term deposit (1–5 years) in permitted currencies.
Fully repatriable, tax-free interest in India (if NRI or RNOR).
Protects against exchange rate fluctuations.
How Classic Partner Assists
We provide complete FEMA advisory for:
Drafting FEMA-compliant loan agreements
NRE/NRO/FCNR account setup & compliance
Property purchase, inheritance & sale under FEMA
Filing Form 15CA/CB for outward remittances
RBI approval applications for higher-value transactions
End-to-end tax planning + FEMA compliance for NRIs
Looking for FEMA & NRI Compliance Experts?
At Classic Partner, our FEMA consultants and Chartered Accountants ensure your borrowings, property dealings, and NRI bank accounts stay 100% compliant.
Contact us today for professional guidance on FEMA, RBI, and NRI regulations.
