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FEMA Rules and Regulations

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Title: FEMA Rules and Regulations


1
FEMA Rules and Regulations
2
  • 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.

3
  • 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

4
  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.
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