In plain words: can a resident lend money to an NRI relative, or borrow from one? FEMA allows it — but within specific conditions. Getting those conditions right keeps a family loan clean.
Resident lending to an NRI
A resident individual can give a rupee loan to a close NRI relative, subject to conditions — typically it must be interest-free, for a minimum maturity, within the LRS limit, credited to the NRI's NRO account, and not used for prohibited purposes (like relending or certain businesses).
NRI lending to a resident
- An NRI can give a rupee loan to a resident relative, subject to conditions — commonly interest-free, for a minimum period, through banking channels, on a non-repatriable basis.
- Borrowing by residents from NRIs on a commercial, repatriable basis is more restricted and may fall under the ECB/deposit rules.
Businesses borrowing from NRIs
An Indian company borrowing from NRIs is governed by the deposit and ECB frameworks, not the family-loan concession — with their own conditions on tenure, cost and repatriation.
The conditions that matter
- Relationship — many concessions apply only to close relatives.
- Interest — family loans are often required to be interest-free.
- Channel — through banking channels and the correct account.
- End-use — not for prohibited activities.
The practical lesson
Document the loan properly — a loan agreement, the banking trail, and compliance with the interest, tenure and account conditions. Casual, undocumented cross-border loans invite FEMA trouble.
Frequently asked questions
Can I lend to my NRI son? Yes — typically interest-free, within LRS, to his NRO account, for a minimum period.
Can an NRI lend to me? Yes — to a resident relative, usually interest-free and non-repatriable.
Can my company borrow from NRIs? That falls under deposit/ECB rules, with their own conditions.
How Vakil Help Desk helps
Vakil Help Desk advises on FEMA compliance, NRI and foreign-national matters, foreign investment and compounding — and represents clients in ED FEMA proceedings. If you have a cross-border transaction or a FEMA question, we can help you get it right.
This article is for general legal awareness, not individual legal advice. FEMA rules, limits and forms are revised by the RBI and the Government from time to time, and the right treatment depends on your facts and the current position. Please consult a professional before acting on a cross-border transaction.