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I am going to take a temporary loan from my friend, He will be giving me money in Dubai and I will send that money to my NRE account in India. After two months I want to pay this back through my NRE account by cheque to his NRE account in India.

Is there any restriction for this kind of transaction?

Regards Nitin

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In general, deposits into an NRE account must be the proceeds of remittances from outside India. If you send your friend a cheque, denominated in Indian Rupees, drawn on your NRE account (which is an account held in a bank in India), that cheque will most likely be refused by your friend's bank for deposit into your friend's NRE account. Your friend could deposit it into an NRO account, though, but that deposit would likely draw the attention of the income tax people.

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