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November 2016

Notification No. FEMA 5(R)/2016-RB dated September 8, 2016

By Gaurang Gandhi
Chartered Accountant
Reading Time 1 mins

CORRIGENDUM  – G.S.R. 389(E) –
dated September 8, 2016

Foreign  Exchange  management 
(deposit)  Regulations, 2016

By a Corrigendum dated September
8, 2016 published in the Gazette of india, extraordinary, Part-ii, Section 3,
Sub-section (i), the following changes have been made to Notification No. FEMA
5(R)/2016-RB relating to Foreign exchange management (deposit) regulations,
2016: ­

Paragraph 6(3) of Schedule i has
been substituted as under: ­

“loans  outside india – authorised dealers may allow
their branches/correspondents outside india to grant loans to or in favour of
non-resident depositor or to third parties at the request of depositor for bona
fide purpose against the security of funds held in the NRE accounts in india
and also agree for remittance of the funds from india, if necessary, for
liquidation of the outstanding.”

Previously, third party loans
could be given for bona fide purpose except for the purpose of relending or
carrying on agricultural / plantation activities or for investment in real
estate business. With this amendment restriction on user of funds has been
removed.

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