The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulation Act, 1973. Every bank and housing finance company follows the RBI guidelines to define an NRI - "An Indian citizen who holds a valid document like an Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is an NRI."
Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are:
Documents required for Resident Indians and NRIs for getting home loans are different in some respects. Home loans for NRIs are available for construction of new houses/ flats, purchase of old house/ flat addition/ alteration to an existing house and repairs/ renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfill certain conditions, according to the provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more.
The FDI policy that permits FDI up to 100% from a foreign/ NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available.
Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.
The eligibility criterias for NRIs differ from Resident Indians based on a few parameters. The parameters include:
|Age||Qualification||Income||Payment options||Number of dependants|
|The loan applicant has to be 21 years of age.||The NRI loan seeker has to be a graduate.||The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs). The eligibility is also determined by the stability and continuity of employment or business.||The NRI also has to route his EMI (Equated Monthly Instalment) cheques through his NRE/ NRO account. He cannot make payments from another source such as, his savings account in India.||The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.|
Home loans for an NRI applicant ranges from a minimum of INR. 5 lakhs to a maximum of INR. 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.
However, the eligibility can be enhanced by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is somewhere between 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans. As such, the NRIs who hail from locations that are marked as being 'negative' in the books of HFCs, find it difficult to get a home loan.
The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India must pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country.
The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directives for sanctioning home loans to Non-Resident Indians.
The guidelines provided are:
The repayment option for NRIs is that they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time.
Apart from the documents mentioned below, a vital document required while processing any NRI home loan is the ‘Power of Attorney’ (POA). Since the borrower is not based in India, the POA is important because HFCs would need a 'representative' 'in lieu of' the NRI to deal with if necessary. Although not obligatory, the POA is usually drawn on the NRI's parents/ wife/ children.
The documents needed for obtaining NRI home loans are:
List of Classified documents for Salaried and Self Employed NRI Applicants:
|Salaried NRI Applicants||Self-Employed NRI Applicants|
|Copy of a valid passport showing visa stamps||Passport copy with valid visa stamps|
|Copy of valid visa/ work permit/ equivalent document supporting the NRI status of the proposed account holder||Brief profile of the applicant and business/ Trade license or an equivalent document|
|Overseas bank A/C for the last 3 months showing salary credits||6 months overseas bank account statements and NRE/ NRO account|
|Latest contract copy evidencing salary/ salary certificate/wage slips||Computation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)|
Photocopy of PIO Card
If the PIO card is not available, photocopies of any of the following documents:
Before construction on a project can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction attract litigation.