Can pio holder resident in india borrow from resident indian


Can a PIO holder resident in India borrow from a Indian citizen in Indian Rupees? Does he need RBI approval? What interest rate can be charged?



A person is said to be a resident of India if he/she spends 182 days or more of a financial year in the country. So first of all you need to verify if that the person is an PIO holder resident or not. 

An Indian citizen can grant loan to a PIO by a way of crossed cheque/electronic transfer considering the following terms:

  1. Loan is supposed to be free of interest.
  2. Minimum maturity of the loan in 1 year.
  3. The loan amount should be within the overall limit under the Liberalised Remittance Scheme per financial year.
  4. The loan amount should not be remitted outside India.

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Dear Mr. Choudhary,

THANK YOU very much for this information. Can you provide a reference under which Act or Regulation this is covered. I read about the interest-free aspect but it appears to be for relative only.  The PIO holder lives most of the time in India but is a U.K. citizen.  Can the Indian citizen residing in India, who is not related to the PIO holder, give interest-bearing loan in Crores to the U.K. citizen (PIO holder residing mostly in India)?

That information would be very helpful.




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