Family Loans to NRIs and Home Loans After Moving Abroad: RBI Rules for Bengaluru Families

Here are two situations a Bengaluru family with a child working abroad may face. In the first, parents in Jayanagar want to lend their son in Seattle part of the money for a flat in the city, to be repaid later. In the second, a daughter bought a flat on a home loan while working in Bengaluru, then took a job in London and now wonders what happens to the loan. Both are covered by the same Reserve Bank of India document, last updated on 8 September 2026, and in each case the answer turns on whose account the money moves through.

The document is RBI's Master Direction on borrowing and lending in Indian rupees between persons resident in India and NRIs or PIOs. Paragraph 6 deals with rupee loans from a resident individual to an NRI relative, and paragraph 7 deals with a change in residential status after a loan is taken. This guide reads both for Bengaluru families. It is buyer guidance on the foreign exchange rules, not legal or tax advice.

The short answer. RBI's Master Direction says a resident individual may grant a rupee loan to an NRI relative by crossed cheque or electronic transfer, provided the loan is free of interest, has a minimum maturity of one year, stays within the lender's overall Liberalised Remittance Scheme limit for the financial year, and is credited to the borrower's NRO account rather than remitted abroad. It says a bank may allow a loan taken by a resident to continue till its original maturity if the borrower later becomes a non-resident, with repayment from inward remittances or the borrower's non-resident accounts. The trade-off: a family loan can help with a down payment, but it must be interest-free and counted within the parent's LRS limit, and the paper trail has to show exactly that.

Can parents in India lend money to their NRI child for a flat?

Yes, within conditions. Paragraph 6 of the Direction says a resident individual may grant an INR loan to an NRI relative by way of crossed cheque or electronic transfer, subject to terms. The loan must be free of interest and have a minimum maturity of one year. The loan amount should be within the overall limit under the Liberalised Remittance Scheme per financial year available to a resident individual, and the lender must ensure that the applicable limit is not breached.

Two conditions are about where the money goes. The Direction says the loan amount shall not be remitted outside India but shall be credited to the NRO account of the borrower. So in the opening example, the parents' money should go by cheque or electronic transfer into their son's NRO account in India, from where he can pay towards the Bengaluru flat.

Here is how that looks on a timeline. Suppose the parents transfer Rs 15 lakh to their son's NRO account in June 2026 as an interest-free loan. Under the Direction, the loan cannot carry interest, its maturity should be at least one year, so repayment would fall due no earlier than June 2027, and the Rs 15 lakh counts towards the lending parent's LRS limit for the 2026 to 2027 financial year. If both parents lend, each should check their own limit, since the Direction speaks of the limit available to a resident individual.

How must such a loan be repaid?

From abroad or from the borrower's accounts, or from the property. The Direction says repayment shall be made by inward remittances from outside India, or by debit to the NRO, NRE or FCNR(B) account of the borrower, or out of the sale proceeds of the shares, securities or immovable property against which the loan was granted.

What if I took a home loan as a resident and then moved abroad?

The loan can continue, at the bank's discretion. Paragraph 7.1 of the Direction says that where a borrower who has taken a rupee loan or overdraft from an authorised dealer bank changes status from a person resident in India to a person resident outside India, the bank may allow continuance of the loan till its original maturity, subject to the satisfaction of the lender.

Repayment then has to come from the right places. The Direction says that so long as the borrower remains a person resident outside India, repayment shall be out of inward remittance from outside India or from the borrower's NRE, FCNR(B), NRNR, NRO or NRSR account. If you are moving abroad with a Bengaluru home loan running, tell your bank about the change in status and set up EMIs from one of those sources.

In the opening example, the daughter now working in London would ask her bank, if the loan is from an authorised dealer bank, whether it will allow the loan to continue till maturity. If it does, her EMIs would need to come by remittance from the United Kingdom or from one of the non-resident accounts the Direction lists, rather than from a resident savings account, for as long as she remains resident outside India.

What if the lender moves abroad instead?

Repayment goes to the lender's NRO account. Paragraph 7.2 says that where a rupee loan was granted by a person resident in India to another person resident in India, and the lender subsequently becomes a person resident outside India, repayment by the resident borrower should be made by credit to the NRO account of the lender. If a sibling lent you money for your down payment and later moved abroad, the repayments should go into their NRO account in India.

Can an NRI borrow from a bank against a Bengaluru property?

For some purposes, yes. Paragraph 3.1 says an authorised dealer may grant INR loans to an NRI against security of shares and other securities, or against the security of immovable property other than agricultural or plantation land or farm house, held by the NRI, subject to terms. The loan amount shall not be remitted outside India or credited to the borrower's NRE, FCNR(B) or NRNR account, and repayment should be by inward remittance or debit to the borrower's NRE, NRO, FCNR(B), NRNR or NRSR account, or from sale proceeds of the securities offered. The Direction adds that such loans can also be repaid by any relative of the borrower in India through account to account transfer.

Paragraph 3.1 also allows an authorised dealer, subject to these terms and to prudential norms, to grant INR loans to an NRI for any other purpose as per its board-approved policy, provided the loan proceeds are not used for investment in the capital market, including margin trading and derivatives. Repayment of such a loan is by remittance from outside India or by debit to the borrower's NRE, FCNR(B) or NRO account.

For a housing loan to buy a flat, the separate paragraph 4 applies; our guide to NRI home loans under RBI's rules covers who may lend, at what terms and from which accounts EMIs may be paid.

How should a family document an intra-family loan?

In writing, and in line with the conditions. The Direction's conditions are specific: interest-free, at least one year, within the LRS limit, by crossed cheque or electronic transfer, credited to the NRO account. A short written loan note between parent and child that records the amount, date, the fact that it carries no interest, and the repayment date, kept with the bank statements of both accounts, shows that each condition was met. Repayments should then come by inward remittance or from the child's NRO, NRE or FCNR(B) account, as the Direction lists.

If the money is a gift rather than a loan, paragraph 6 does not describe it. For the rules on paying for the flat itself, our guide to the RBI FAQ on NRI property purchases explains how payments for the flat must be made.

A seven-point checklist for family loans and status changes

1. Confirm the borrower is an NRI relative before a resident parent lends.
2. Pay only by crossed cheque or electronic transfer into the borrower's NRO account.
3. Keep the loan interest-free with a maturity of at least one year.
4. Track the amount against the lender's LRS limit for the financial year.
5. Record the loan in a short written note and keep both bank statements.
6. If you move abroad with a home loan, tell your bank and set up EMIs from permitted accounts.
7. If your lender moves abroad, repay into their NRO account in India.

Frequently asked questions

Can my parents in India lend me money for a flat if I am an NRI?

Yes. RBI's Master Direction allows a resident individual to grant a rupee loan to an NRI relative by crossed cheque or electronic transfer, if the loan is interest-free, has a minimum maturity of one year, stays within the lender's LRS limit, and is credited to the borrower's NRO account.

How do I repay a loan from my parents as an NRI?

The Direction says repayment shall be made by inward remittances from outside India, by debit to the borrower's NRO, NRE or FCNR(B) account, or out of the sale proceeds of the shares, securities or immovable property against which the loan was granted.

What happens to my home loan if I move abroad?

Paragraph 7.1 says the bank may allow the loan to continue till its original maturity, subject to its satisfaction. While you remain resident outside India, repayment must come from inward remittance or from your NRE, FCNR(B), NRNR, NRO or NRSR account.

Can a family loan to an NRI carry interest?

No. RBI's Master Direction says a rupee loan by a resident individual to an NRI relative must be free of interest, with a minimum maturity of one year, and within the overall Liberalised Remittance Scheme limit available to the resident lender for the financial year.

Last updated 2026-11-05. PropNewz Team.