In case of persons who had availed of loan or overdraft facilities while resident in India and who subsequently become non-resident, authorised dealers may allow continuance of the loan/overdraft facilities granted to them subject, inter alia, to the following conditions:

(a)The borrower is an Indian citizen or a person of Indian origin.

(b)The rupee loan/overdraft was granted for business purposes or to meet the borrowers personal requirements while he was resident in India and not for investment.

(c)The loan or overdraft will be restricted to the period originally fixed or up to one year from the date of the borrowers departure from India, whichever period is longer, and must not exceed the amount outstanding when he became non-resident.

(d)So long as the borrower continues to be a non-resident, repayment of the loan/overdraft as also payment of interest accruing thereon will be made out of remittance from abroad through normal banking channels or from the funds held in his Non-redsident (External) FCNR/NRNR account. Loan/overdraft can be allowed to be repaid out of local rupee resources held in the NRO account of the borrower subject to the condition that the loan so repaid would be charged interest at commercial rate as in force from time to time.

(e)In case a person of Indian nationality/origin resident in India who had granted loan to another resident subsequently becomes a non-resident, the repayment of the loan by the resident borrower should be made by credit to the NRO account of the lender maintained with a bank in India.

Before according their approval, authorised dealers should obtain from such borrowers an application stating, inter alia,

(i) the date of the borrowers departure from India,
(ii) country to which he has gone,
(iii) the purpose and probable duration of his stay abroad, and
(iv) reasons for continuing the rupee loan/overdraft.