You wired your company money and called it a director loan. FEMA disagrees

A resident director lending their own company money is routine and, done right, sits outside the Companies Act's deposit rules entirely. None of that changes what happens the moment the lender is a non-resident. FEMA and the Companies Act are two separate regimes: an arrangement can be perfectly fine on the company-law side and still be an unreported foreign borrowing on the FEMA side. Your company's accountant may wave the loan through as an ordinary related-party transaction because nothing in the Companies Act stops a director from lending money. RBI's rules are the ones that actually govern it, and they were never asked.

As a loan (ECB). Since a February 2026 liberalisation, any non-resident, not just one who crosses an equity threshold, can lend to an Indian company under the ECB framework. That's good news, but "permissible" isn't the same as "informal." Because a founder-director counts as a related party, the loan has to be priced at arm's length with the same kind of documentation transfer pricing already demands. It needs a minimum 3-year average maturity, a Loan Registration Number obtained through your bank before the money is drawn down, and a Form ECB-2 return within 7 days of month-end whenever money actually moves, a drawdown or a repayment. Skip the registration and the loan is a live FEMA contravention from day one, not a paperwork gap you can quietly backfill.

As equity (share application money). The alternative is to bring the money in against shares you intend to allot, not as a loan at all. That has its own clock: the shares must be allotted within 60 days of the company receiving the money. Miss it, and the money must be refunded within 15 days after that. Miss both, and Indian company law deems it a deposit, the kind private companies generally aren't allowed to accept, now accruing 12% annual interest from the 60th day. There's no cushion here: both company law and FEMA enforce the same 60-day allotment clock for money coming in from a non-resident, so waiting to see how the year goes before deciding isn't really an option.

If you're doing everything right and still worried you've already blown the clock, check this first: the 60-day allotment window starts the day your company receives the money, not the day any paperwork around it is finished.

What actually eats the clock is a mix-up, not a rule. Allotting shares is your company's own action, and it doesn't legally need the bank's confirmation first. What does need it is Form FC-GPR, the RBI filing due within 30 days after allotment, for which the AD bank's e-FIRC and a KYC report on the foreign remitter are required attachments. Founders, and sometimes their own advisors, treat that KYC/FIRC step as a green light to start allotting, when it isn't one, and the wait for it can run from a few days with a large bank's digital process to several weeks with a smaller bank or an unusual transfer.

The fix: don't wait. Start the board resolution, valuation and share paperwork the moment the money lands, in parallel with the FIRC/KYC request, since none of that depends on it. The FIRC only becomes essential afterward, for the FC-GPR filing.

If you went with share application money rather than a loan, the 60-day allotment clock isn't the only way to blow it. Section 42(6) requires that money to sit untouched in a separate bank account, usable only to adjust against the allotment once it happens, or to refund it, nothing else in between. Moving it into the company's main account and spending it on payroll or a vendor invoice while you fully intend to allot well within 60 days is still a breach the moment it happens, not something the later allotment cures. The Registrar has actually fined a company roughly ₹45 lakh for exactly this pattern, spending the money early rather than missing the deadline outright, so this isn't a theoretical reading of the rule.

The practical fix: open a separate account for the money the day it arrives, and don't move a rupee of it anywhere else until the board has actually passed the allotment resolution.

The common pattern: an NRI founder wires in working capital early, it sits on the balance sheet for a year or two labelled "loan from director," and nobody ever registers it for a Loan Registration Number. It surfaces later at a funding round or an audit, by which point it's an unregistered foreign borrowing that needs RBI compounding to regularise, on top of whatever the company owes if it was informally treated as a deposit instead. The exposure isn't just the missing registration either: every drawdown and every repayment that already happened on an unregistered loan is its own missed Form ECB-2, a separate reporting lapse RBI can treat individually, not one problem that shrinks to nothing just because no fresh money has moved recently. The fix at that stage is still possible, but it's slower and costlier than registering it correctly when the money first came in.