Repayment of Loans from Close Relatives Abroad: NRE/FCNR(B) Credit Allowed
Current · Source: Reserve Bank of India · RBI/2011-12/465 · issued 21 Mar 2012 · ~2 min read
Quick answerRBI now permits AD Category-I banks to credit loan repayments from resident individuals to the lender's NRE/FCNR(B) account, provided the original loan was received via inward remittance or debit from such accounts and the lender is eligible to hold them.
The rule, in the simplest words
AD Category-I banks can now allow repayment of loans from close relatives abroad to NRE/FCNR(B) accounts.
The original loan must have been received via inward remittance or debit from such accounts.
The lender must be eligible to hold NRE/FCNR(B) accounts under FEMA 5/2000-RB.
The loan amount must comply with FEMA 3/2000-RB, including the USD 250,000 limit.
How it plays out — a real example
A forex & trade-finance officer in Indore, Mr. Kumar, helps a resident individual, Mrs. Singh, repay a loan she took from her brother abroad. The loan was originally received via inward remittance, and the brother has an NRE account. Mr. Kumar verifies the source of the loan and the brother's eligibility before allowing the credit to the NRE account. This simplifies the repayment process for Mrs. Singh and reduces compliance friction for the bank.
What changed
RBI has now clarified that AD Category-I banks may allow repayment of such loans to NRE/FCNR(B) accounts, subject to conditions, in response to representations.
What it means for you
This circular simplifies the repayment process for loans taken by residents from close relatives abroad, reducing compliance friction. Banks must verify the source of the original loan and the lender's eligibility before allowing the credit. It also clarifies that such credits are treated as eligible under existing deposit regulations.
What you must do
Update internal guidelines to allow repayment credits to NRE/FCNR(B) accounts only when the original loan was via inward remittance or debit from such accounts.
Verify lender eligibility to hold NRE/FCNR(B) accounts under FEMA 5/2000-RB before processing the credit.
Train staff on the conditions specified in the circular, noting that the loan must comply with FEMA 3/2000-RB (including the USD 250,000 limit).
Communicate this change to relevant constituents and ensure compliance with FEMA provisions.
Who it affects
AD Category-I banks, Resident individuals borrowing from close relatives abroad, Non-resident lenders with NRE/FCNR(B) accounts
❓ Common questions
Can a resident repay a loan from a close relative abroad by crediting the lender's NRE account directly?
Yes, AD Category-I banks may allow such credit if the original loan was received via inward remittance in foreign exchange or by debit to the lender's NRE/FCNR(B) account, and the lender is eligible to hold such accounts.
What is the maximum loan amount covered under this circular?
The loan must not exceed USD 250,000 or its equivalent, as per the existing regulations under FEMA 3/2000-RB.
Does this circular apply to all types of NRE/FCNR(B) accounts?
Yes, it applies to both NRE and FCNR(B) accounts, provided the lender meets eligibility criteria under FEMA 5/2000-RB.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/465
A. P. (DIR Series) Circular No.95
March 21, 2012
To
All Category-I Authorised Dealer Banks and Authorised banks
Madam / Sir,
Foreign Exchange Management (Deposit) Regulations, 2000 – Credit to Non Resident (External) Rupee / Foreign Currency Non-Resident (Bank) Account
Attention of Authorised Dealer Category - I (AD Category-I) banks is invited to Regulation 5(6) of Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 notified vide Notification No. FEMA 3/2000-RB dated May 3, 2000 , as amended from time to time, in terms of which, an individual resident in India may borrow a sum not exceeding USD 250,000/- or its equivalent from her / his close relatives outside India, subject to the conditions mentioned therein.
2. The Reserve Bank has received representations that the repayment of such loans may be allowed to be credited to the Non Resident (External) Rupee (NRE) Accounts. On review, it has been decided that AD Category-I banks may allow repayment of such loans to NRE / Foreign Currency Non-Resident (Bank) [FCNR(B)] account of the lender concerned subject to the condition that the loan to the resident individual was extended by way of inward remittance in foreign exchange through normal banking channels or by debit to the NRE / FCNR(B) account of the lender and the lender is eligible to open NRE / FCNR(B) account within meaning of the Foreign Exchange Management (Deposit) Regulations, 2000 notified vide Notification No. FEMA 5/2000-RB dated May 3, 2000 , as amended from time to time. Such credit shall be treated as an eligible credit to the NRE / FCNR(B) account in terms of Para 3(j) of Schedule-1 read with Para 5 of Scheule-2 of Notification No. FEMA 5/2000-RB, ibid.
3. Authorized Dealer banks may please 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 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Meena Hemchandra)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/465 · issued 21 Mar 2012. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Resident individuals borrowing from close relatives abroad, Non-resident lenders with NRE/FCNR(B) accounts), your first concrete step on “Repayment of Loans from Close Relatives Abroad: NRE/FCNR(B) Credit Allowed” is: “Update internal guidelines to allow repayment credits to NRE/FCNR(B) accounts only when the original loan was via inward remittance or debit from such accounts.” (RBI issued this 21 Mar 2012).
Circular: RBI/2011-12/465 -- Repayment of Loans from Close Relatives Abroad: NRE/FCNR(B) Credit Allowed
Issued: 21 Mar 2012
Action required: Update internal guidelines to allow repayment credits to NRE/FCNR(B) accounts only when the original loan was via inward remittance or debit from such accounts.
Action required: Verify lender eligibility to hold NRE/FCNR(B) accounts under FEMA 5/2000-RB before processing the credit.
Action required: Train staff on the conditions specified in the circular, noting that the loan must comply with FEMA 3/2000-RB (including the USD 250,000 limit).
Action required: Communicate this change to relevant constituents and ensure compliance with FEMA provisions.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7084&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.