Fcnr(b) loan

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27 November 2017 Software service provider can get fcnr(b) loan from bank ?( any bank either nationalize or private)??

Querist : Anonymous

Querist : Anonymous (Querist)

28 November 2017 please give a guidance to my query

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 Yes, software service providers can avail FCNR (B) loans from banks, both nationalized and private banks, subject to certain conditions and regulations. FCNR (B) loans are Foreign Currency Non-Resident (Bank) loans, which are typically denominated in foreign currencies like USD, GBP, EUR, etc., and are available to Indian entities for specific purposes permitted by the Reserve Bank of India (RBI).

Here are some key points to consider:

1. **Eligibility:**
- Indian software service providers can avail FCNR (B) loans for business purposes such as project financing, working capital requirements, capital expenditure, etc.
- The eligibility criteria and permissible end uses are determined by the RBI guidelines, which may vary from time to time.

2. **Banks Offering FCNR (B) Loans:**
- Both nationalized banks (such as State Bank of India, Punjab National Bank, etc.) and private banks (such as HDFC Bank, ICICI Bank, etc.) can offer FCNR (B) loans.
- The availability and terms of these loans may differ among banks, and it's advisable to check with specific banks for their offerings and requirements.

3. **Currency Denomination:**
- FCNR (B) loans are denominated in specified foreign currencies. The choice of currency depends on the borrower's preference and the currency in which the company earns revenues or expects future inflows.

4. **RBI Regulations:**
- The RBI regulates FCNR (B) loans, including the maximum loan amount, repayment terms, interest rates, etc.
- It's essential for software service providers to comply with RBI guidelines regarding borrowing and utilization of foreign currency loans.

5. **Documentation and Compliance:**
- Borrowers need to provide necessary documentation and comply with regulatory requirements as stipulated by the RBI and the lending bank.
- This may include submission of project reports, financial statements, compliance with FEMA (Foreign Exchange Management Act) regulations, etc.

Before proceeding with an FCNR (B) loan, it's advisable for software service providers to consult with their bankers or financial advisors to ensure compliance with regulatory requirements and to choose the most suitable borrowing option based on their specific business needs and financial circumstances.

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