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February 2014

A. P. (DIR Series) Circular No. 81 dated 24th December, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Notification No. FEMA.287/2013-RB dated 17th September, 2013, vide G.S.R. No. 645(E) dated 20th September, 2013, read with Corrigendum dated 24th October, 2013 vide G.S.R.No.741(E) dated 19th November, 2013

Borrowing and Lending in Rupees – Investments by persons resident outside India in the tax free, secured, redeemable, non-convertible bonds

Presently, a person resident in India who has borrowed in Rupees from a person resident outside India cannot use the said funds for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not, or for relending.

This circular now permits resident entities/companies in India who are authorised to issue tax-free, secured, redeemable, non-convertible bonds in Rupees to persons resident outside India to use such borrowed funds for lending & investment as under: –

(a) For on lending/re-lending to the infrastructure sector; and

(b) For keeping in fixed deposits with banks in India pending utilisation by them for permissible end-uses.

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