Regulations 6 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Regulations 6 and 7 deal with rupee borrowing and rupee lending by a person resident in India. Regulation 7-A lets a person resident outside India do repo and reverse repo in rupees. Regulation 8 keeps a loan alive when the lender or borrower changes residential status, and regulation 9 lets old borrowings run to their due date.
These are the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Notification No. FEMA.3(R)/2018-RB, December 17, 2018), as per the text on the Reserve Bank's site, amended up to February 16, 2026, read beside the Master Direction on rupee borrowing and lending with NRIs and PIOs, updated as on September 08, 2026. A resident individual may now borrow rupees from an NRI or an OCI-cardholder relative, but only on a non-repatriation basis. Repayment goes to the lender's NRO account. The two texts print different figures for a bank's rupee overdraft to an overseas bank; both are given below.
Authority and what is read
The Regulations rest on the Foreign Exchange Management Act, 1999. Their preamble cites "clauses (a), (d) and (e) of Sub-Section (3) of Section 6, sub-section (2) of Section 47". The Act text now prints section 6(3) as omitted, and section 47(3) keeps earlier Reserve Bank regulations in force until they are amended or rescinded. See the Act articles on section 6 and sections 47 and 48.
The Master Direction is the Reserve Bank's direction to Authorised Dealers (FED Master Direction No. 6/2015-16, January 1, 2016, updated as on September 08, 2026). Its cover letter still names the Borrowing and Lending in Rupees Regulations, 2000, notified as FEMA 4/2000-RB; the 2018 Regulations say they supersede that notification. The Master Direction's paragraph 2 is printed "". Where it differs from the Regulations, both are given. If you also need the income-tax side of an NRI loan, see our NRI tax filing service and income-tax guides.
Regulation 6: borrowing in rupees by a resident
| Sub-regulation | Who | What it says |
|---|---|---|
| 6(A) | Authorised Dealer | May raise rupee denominated ECB from outside India under Schedule I |
| 6(B)(i) | Eligible resident entities | May raise rupee denominated ECB under Schedule I |
| 6(B)(ii) | Eligible resident entities as defined by the Government of India | May borrow from overseas multilateral financial institutions or international development financial institutions whose source of funds is rupee denominated bonds issued overseas, resources raised domestically, or another source the Government approves |
| 6(B)(iii) | Importers | May raise trade credit in rupees under Schedule II |
| 6(B)(iv) | Foreign investment in the nature of debt | Must comply with the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (FEMA 20(R)/2017-RB, November 07, 2017) where not otherwise covered |
| 6(B)(v) | Deposits with or from a person resident outside India | Must comply with the Deposit Regulations, 2016, including loans or overdrafts against the security of such accounts |
| 6(B)(vi) | An individual resident in India | May borrow in rupees from an NRI or a relative who is an OCI cardholder, for use in India, on terms (a) and (b) below |
| 6(B)(vii) | Parliament-created financial institutions | Rupee borrowings from outside India with prior Government approval, for onward lending |
Sub-regulation 6(B)(vi) was substituted with effect from February 16, 2026 by Notification No. FEMA 3(R)(5)/2026-RB dated February 09, 2026, as the footnote on the page states. The terms are: (a) the loan is received by inward remittance from outside India or by debit to the lender's NRE, NRO, FCNR(B) or SNRR account; and (b) the borrowing is on a non-repatriation basis, so interest and principal are paid only to the lender's NRO account.
Regulation 7: lending in rupees by a resident
Authorised Dealer (7(A)). An AD may grant a loan to an NRI or OCI cardholder for personal requirements, own business purposes, acquisition of a residential accommodation or a motor vehicle in India, or any purpose under the AD board's loan policy and the Reserve Bank's prudential guidelines, ensuring funds are not used for restricted end-uses. It may allow a temporary overdraft in a rupee account of its overseas branch, correspondent or head office, "for value not exceeding Rupees 5 billion or any other amount as prescribed by the Reserve Bank". It may lend to a person resident outside India for margin payments on Government Securities settlement (inserted with effect from May 28, 2021 by Notification FEMA 3(R)2/2021-RB dated May 24, 2021), and may lend in rupees to a person resident in Bhutan, Nepal or Sri Lanka, including a bank there, for cross-border trade (inserted with effect from October 09, 2025 by Notification FEMA 3(R)(4)/2025-RB dated October 06, 2025).
Others (7(B)). A registered NBFC, housing finance institution or other specified financial institution may give housing or vehicle loans to an NRI or OCI cardholder. An Indian entity may lend rupees to an NRI or OCI-cardholder employee under its Staff Welfare Scheme. A resident individual may lend rupees to an NRI or OCI-cardholder relative within the overall limit under the Liberalised Remittance Scheme. Each is on terms the Reserve Bank prescribes, and the borrower should ensure funds are not used for restricted end-uses.
Regulation 7-A and regulation 8
Regulation 7-A (inserted with effect from February 27, 2019 by FEMA 3(R)1/2019-RB dated February 26, 2019) lets a person resident outside India undertake repo or reverse repo in rupees to borrow or lend money, on terms the Reserve Bank specifies. Repo and reverse repo take the meaning in section 45U of the Reserve Bank of India Act, 1934.
Regulation 8 handles change of status:
- an AD or authorised bank may allow continuance of loans to a resident individual who later becomes a person resident outside India, on terms the Reserve Bank specifies;
- if one resident individual lent to another and the lender becomes non-resident, repayment is by credit to the lender's NRO account or another account at the lender's option;
- if an NRI or OCI cardholder lent to a resident and then becomes resident, repayment may go to the designated account the Reserve Bank specifies, at the lender's option; and
- a resident individual may service loans taken earlier as a person resident outside India within the terms and limit the Reserve Bank specifies.
Regulation 9, which the page prints with no heading, says any borrowing under erstwhile regulations can be continued as permitted up to the due date of repayment.
The Master Direction beside the Regulations
| Subject | Master Direction paragraph (updated as on September 08, 2026) |
|---|---|
| AD loan to NRI against shares or immovable property | 3.1: not against agricultural or plantation land or farm house; loan not remitted outside India nor credited to NRE or FCNR(B); other purposes allowed under board policy, with no capital market investment |
| ESOP loan to NRI employee | 3.2: not over 90 per cent of the purchase price of the shares or INR 20 lakhs per NRI employee, whichever is lower; paid directly to the company |
| Housing loan to NRI or PIO | 4: quantum, margin and repayment period at par with a resident; fully secured by equitable mortgage |
| Loan by Indian body corporate to NRI or PIO employee | 5: personal purposes including housing property; loan credited to the borrower's NRO account |
| Loan by resident individual to NRI relative | 6: carries no interest; minimum maturity one year; within the LRS limit; credited to the borrower's NRO account |
| Change of status | 7.1 and 7.2 |
| Overdraft by AD to overseas branch or correspondent | 8: not exceeding INR five hundred lakhs in aggregate |
On the overdraft, regulation 7(A)(ii) prints "Rupees 5 billion" and paragraph 8 of the Master Direction prints "INR five hundred lakhs"; this article does not reconcile them. The Master Direction's cover also still speaks of "PIO" and the 2000 notification, so read it as the bank's operating text and check later amendments and circulars.
An example
Rohit Nair, resident in India, wants a rupee loan from his brother, an NRI, to meet a medical expense. Under regulation 6(B)(vi) the money must arrive by inward remittance or from the brother's NRE, NRO, FCNR(B) or SNRR account, and both interest and principal go back only to the brother's NRO account. The related income-tax questions sit outside these Regulations.
Need help with an NRI loan?
Loans between residents and NRIs touch exchange control, deposits and tax. Our NRI tax filing team can check the account route and the tax filing for the lender and the borrower.
Key takeaways
- A resident individual may borrow in rupees from an NRI or OCI-cardholder relative, repaid only to the lender's NRO account (regulation 6(B)(vi), as substituted from February 16, 2026).
- A resident individual may lend rupees to an NRI or OCI-cardholder relative within the LRS limit (regulation 7(B)(iii)).
- Persons resident outside India may undertake repo and reverse repo in rupees (regulation 7-A).
- Loans continue across a change of residence, with repayments routed as regulation 8 says.
- The Regulations and the Master Direction print different figures for the rupee overdraft; both are stated above.
Read next
- Lending in foreign exchange: regulation 5 and Schedule III
- Regulations 1 to 3A: the ban, the definitions and the end-use list
- NRI accounts: NRE, NRO and FCNR
- NRO account features, TDS and repatriation
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.