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FEMA Query

Deepak Gadgil (Chartered Accountant) (19 Points)

02 June 2007

Dear Friends

Here is one query on FEMA Issues

1)Mr X is in need of Rs. 10 Lakhs to come out of Financial difficulties (Bank Loans which are NPA) arising out of his small business operated from out of his residence cum office.

2) He has a close friend from US who is NRI / PIO ready to finance that amount of Rs. 10 lakhs in one go by a single cheque.

Whehter he can he accept the same & clear the dues. What r the necessary formalities to be complied from FEMA angle?

Pl reply ASAP

Thanks in advance

Regards

CA Deepak Gadgil

Solapur, Maharashtra

gadgildeepak2000 @ yahoo.com

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3 Replies

The One (379 Points)
Replied 02 June 2007

Dear Sir I am certain the FEM (Borrowing & Lending of Foreign Exchange) Rules would apply. There is a circular regarding borrowing from "close relatives" - but you mention close friend which would not be covered there in. Unfortunately I don't have access to the FEMA online website - I would suggest taking up a subscription and looking up the rules. Perhaps some other members could chip in. Regards.

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Sivakumar N (Services) (106 Points)
Replied 24 June 2007

Many a times an UN-related friend helps rather than family/relatives members ; hence one needs to represent with the RBI for a amendment to this end, ie.,provide for general permission to borrow from any overseas entity/ atleast a PIO (incl. of non-relative) to the extent presently permitted = US$250,000- per annum.

(Guest)

My client is a registered Society (Charitable Institution) and is registered under the Foreign Contribution Regulation Act. Now it wishes to take a foreign loan (interest free) for some charitable activities. Could you please advise what are the formalities it has to follow before availing the loan?