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Our Bureau

Mumbai , Feb. 12

THE Reserve Bank of India has granted more freedom to banks in advancing rupee loans to non-resident Indians.

Commercial banks will be free to grant rupee loans at the discretion of their individual boards so long as the funds are not used for the following purposes: the business of chit fund or a nidhi company.

The funds should also not find its way into utilisation for agricultural or plantation activities or in real estate business, construction of farm houses, or trading in transferable development rights, or in capital market investments including margin trading and derivatives, said a RBI circular addressed to commercials banks.

The relaxation has been made in response to requests from commercial banks for the same. Earlier the legislation, the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000, permitted advances to NRIs only against the security of shares or immovable property in India for personal or business purposes for housing loans against the security of houses/flats to be acquired for acquisition of residential accommodation in India.

The circular advised that the quantum of loan, rate of interest, margins etc. on such loans may be decided by the banks based on relevant directives issued by the central bank.

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