Foreign Currency Loans in India to holders of FCNR(B) Deposits

AP (DIR Series) (2002-2003) Circular No. 55, dated 26-11-2002

Foreign Currency Loans in India to holders of FCNR(B) Deposits - Clarification

Attention of authorised dealers is invited to AP (DIR Series) Circular No. 24 dated September 25, 2002 in terms of which they are permitted to grant foreign currency loans in India against the security of funds held in FCNR(B) deposit accounts to the account holders only, subject to the guidelines given in the Annexure thereto.

2. It is clarified that the prohibitions placed on grant of rupee loans against NRE/FCNR deposits for purpose of relending or carrying on agricultural/plantation activities or for investment in real estate business shall also be applicable, to foreign currency loans granted in terms of the above circular.

3. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

4. The directions contained in this circular have been issued under section 10(4) and section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).