FEMA Rules and Regulations

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FEMA Rules and Regulations
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• Let us have a look at the rules and regulations
  involving the borrowing and lending process in
  rupees. fema rules regulations were made
  effective from 1st June 2000.
• What is FEMA?
• FEMA is actually an act that refers to the FEMA
  of 1999. Here are a few interesting points
  regarding FEMA.
• Every authorized bank, dealer, Non-Resident of
  India, NRO, FCNR shall have the same meaning as
  that in FEMA regulations of 2000. This was framed
  by RBI.
• It shall also hold the same meaning for Housing
  Finance Institution and National Finance Bank as
  have been mentioned in the National Housing Bank
  Act of 1987.
• The Liberated Remittance Scheme suggests that it
  is formulated in terms of the circular A.P. in
  DIR series and has been amended then.
• The definition of a relative as in the case of
  section 6 of the companies act of 1956.

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• Let us have a look at some more rules concerning
  the FEMA rules and regulations.
• No person staying in India can borrow or lend
  money in rupees to a person who is from outside
  India. There might be an exception to this only
  if the RBI permits. A person using a credit card
  out of India shall not be considered as borrowing
  or lending.
• A resident of India can borrow from an NRI for
  Foreign Trade procedures only. Some of the
  conditions that avail in this case are as
  follows

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1. The amount of loan shall be received by inward
   remittance from outside India or out of
   Non-Resident External, Non-resident Ordinary and
   Non-resident Special Rupee (NRSR) account of the
   lender that has been maintained with an
   authorized dealer or an authorized bank in India.
2. The tenure of loan should not, in any case,
   extend 3 years.
3. The rate of interest shall not be more than two
   percentage points of the bank rate that is
   prevailing at that particular time.
4. The amount being borrowed shall not be allowed to
   be repatriated to anywhere outside India.