Money Transfer by Indian Citizen to US Citizen to Settle a Debt

Question

I am a US Citizen. I sent money to help out a relative (an Indian Citizen) in India. I used Western Union to transfer the funds from the US -- I paid in USD and he received the remittance in Rupees. He is to pay me back as this was a loan. Can he repay the money back to me in USD through Western Union or some other means? Are there any restrictions or limits? Thank you.

Dheer · Answer

I assume that there is proper documentation.

Loan can only be credited to your NRO account.

See RBI regulation

Persons Resident in India borrowing in INR from NRIs/PIOs
  
  2.1 Available routes for borrowing: Persons resident in Indian may borrow in INR from NRIs/PIOs under the following two routes:
  
  2.1.1 Borrowing in INR by persons other than companies in India: A person resident in India, not being a company incorporated in India,
  may borrow in INR from NRIs/PIOs after satisfying the following terms
  and conditions:
  
  Borrowing shall be only on a non-
  repatriation basis;
  
  The amount of loan should be received either by inward remittance from
  outside India or by debit to NRE/NRO/FCNR(B)/NRNR/NRSR account of the
  lender, maintained with an authorised dealer or an authorised bank in
  India;
  
  Period of loan shall not exceed 3 years;
  
  Rate of interest on the loan shall not be more than two per cent above
  Bank Rate prevailing on the date of availment of loan;
  
  Payment of interest and repayment of principal shall be made only to
  the NRO account of the lender.

Money Transfer by Indian Citizen to US Citizen to Settle a Debt

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