Non‑Resident Indians (NRIs) face clear restrictions and options under FEMA and RBI rules when lending to Indian companies. This often raises the question: Can NRI give loan to Indian company? NRIs including OCI and PIO cardholders are not allowed to directly provide loans or deposits on a repatriation basis to private or limited companies in India. In other words, loans where both principal and interest can be converted back to foreign currency and sent abroad are prohibited.
However, NRIs can lend on a non‑repatriation basis, meaning the funds both loaned and repaid must stay within India, often via an NRO account. For such INR denominated loans, FEMA/RBI rules impose:
Loan term limits: Typically up to three years.
Interest cap: Not more than 2 % above the prevailing bank rate for individuals, and up to 3 % above SBI’s rate for loans to companies via non‑convertible debentures (NCDs).
Permitted usage: Funds cannot be used for prohibited sectors like agriculture, plantation, real estate trading, chit funds, or nidhi companies.
Mode of lending: Must flow through formal banking channels such as inward remittance or debit from the NRE/NRO/FCNR accounts.
Company structure requirement: Loans to companies must be routed via publicly issued NCDs; private loans to non‑equity‑holding, private entities are not permitted.
Additionally, borrowing by Indian companies from NRIs on a repatriation basis is allowed only if the NRI holds at least 25 % direct equity in the company, effectively treating it as an External Commercial Borrowing.
Get End to End NRI Banking Assistance by Experts at NoBroker
Your Feedback Matters! How was this Answer?
Shifting, House?
✔
Lowest Price Quote✔
Safe Relocation✔
Professional Labour✔
Timely Pickup & Delivery
Intercity Shifting-Upto 25% Off
Check Prices
Intracity Shifting-Upto 25% Off
Check Prices
City Tempo-Upto 50% Off
Book Now
Can NRI Give Loan to Indian Company?
anu
82 Views
1
5 months
2025-07-11T07:26:32+00:00 2025-07-11T07:26:34+00:00Comment
Share