A.P. (DIR Series) (2000-2001) Circular No. 18, dated 19-10-2000
India Millennium Deposits (IMDs)
State
Bank of India has been permitted to float a scheme called ‘India Millennium
Deposits’. The details of the scheme will be announced by State Bank of India.
2. Authorised
dealers are permitted to grant loans in non-repatriable rupees, in India, to
the holders of IMDs for personal purposes, and for carrying on business
activities except for the purpose of relending or carrying on agricultural/plantation
activities or for investment in real estate business. NRIs (and not OCBs) may
be granted loans in non-repatriable rupees for acquisition of immovable
property in terms of Foreign Exchange Management (Acquisition and Transfer of
Immovable Property in India) Regulations, 2000 subject to the following
conditions :
(i) The loans should be fully secured
by the value of deposits and accrued interest.
(ii) The
regulations relating to margin, rate of interest, etc., as stipulated by the
Reserve Bank from time to time are adhered to.
(iii) The period of loan should not exceed
the unexpired period of maturity of the deposits.
(iv) The
loan should be repaid out of remittance from abroad or maturity proceeds of the
deposits or out of funds held in India by the deposit holder.
3. Authorised
Dealers may also grant loans to the account holders for the purpose of making
direct investment in India on non-repatriation basis, subject to compliance
with the provisions of Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident Outside India) Regulations, 2000, Foreign
Exchange Management (Investment in Firm or Proprietary concern in India)
Regulations, 2000 and subject to the conditions stipulated in paragraph 2
above.
The
loan amount may be disbursed directly to the investee firm/company on behalf of
the IMD holder.
4. Authorised
dealers may grant loans/overdrafts to individuals/firms/companies resident in
India against the collateral of IMDs, subject to usual norms and the following
conditions :
(i) There
should be no direct or indirect foreign exchange consideration for the
non-resident depositor to pledge his deposits to enable the resident to obtain
the loan.
(ii) The period of loan should not exceed
the unexpired maturity of IMDs.
(iii) Regulations
relating to margin, interest rates, purpose of loan as stipulated by the
Reserve Bank from time to time are adhered to.
(iv) The
loan should be utilised for personal purposes/for carrying on business
activities other than agricultural/plantation activities or real estate
business. The loan should not be utilised for relending.
(v) The loan should be granted only
against a special mandate from the NRI IMD holder.
5. Authorised
dealers shall not grant foreign currency loans against the security of IMDs.
6. Authorised
dealers may bring the contents of this circular to the notice of their
constituents concerned.
7. The
directions contained in this circular have been issued under sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and any
contravention or non-observance thereof is subject to the penalties prescribed
under the Act.