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RBI : Provision To Repay Home Loan Of NRI Relative By Resident Indians

As per the notification issued by the Reserve Bank of India (RBI) on 16th Sep 2011, loan taken by an NRI/PIO from an Indian Bank in rupees can be repaid by an Indian resident who is a close relative of borrower. This can be done by crediting the borrower’s loan account through the bank account of such relative.


Lets have a look at the detail specification of the RBI notification on repayment of loans of non-resident close relatives by residents:-

    • Loan must be taken by a Non Resident Indian (NRI) or Person Of Indian Origin (PIO).
    • Resident Indian can repay loan on behalf of there close relatives (as per Section 6 of the Companies Act, 1956) only.
    • Loan must have been taken in Indian Rupees from an authorized bank or financial institution in India.
    • Only housing loans are allowed to be paid back by the resident Indian.


Meaning of close relative according to the Section 6 of the Companies Act, 1956:-

A person shall be deemed to be a relative of another if, and only if,-

  • they are members of a Hindu undivided family; or
  • they are husband and wife; or
  • the one is related to the other in the manner indicated in Schedule IA.]

List of Relative, As per Schedule 1A :-

1. Father    2. Mother (including step-mother)    3. Son (including step-son)

4. Son’s wife    5. Daughter (including step-daughter)    6. Father’s father

7. Father’s mother    8. Mother’s mother    9 Mother’s father    10. Son’s son

11. Son’s Son’s wife    12. Son’s daughter    13.Son’s daughter’s husband

14. Daughter’s husband    15. Daughter’s son    16. Daughter’s son’s wife

17. Daughter’s daughter    18. Daughter’s daughter’s husband

19. Brother (including step-brother)    20. Brother’s wife

21. Sister (including step-sister)    22. Sister’s husband

RBI Circular On Repayment Of Loans Of Non-Resident Close Relatives By Residents

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