NRI Corner

Non-Resident Indians (NRIs) are recognised under the Foreign Exchange Regulatory Act.

The RBI guidelines followed by banks and housing finance companies states “that an Indian Citizen holding a valid document like Indian Passport, is employed abroad or is carrying on business or vocation outside India or is living abroad for an uncertain duration of stay is an NRI.

NRI Housing Loan Categories

Home loans for NRIs are available for construction of new house/ flats, purchase of old House, addition/alteration to an existing house and repairs/renovation etc. NRIs can mortgage an existing residential property to avail loans. For that NRIs will have to fulfill certain conditions according to provision of the Income Tax Act. Either they should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed for the total of one year or more in the country.

The FDI policy allows NRIs to invest upto 100%, besides banks offer attractive NRI housing schemes with suitable repayment options. It is also advised that due to the vast distances separating them, NRI’s should deal with proactive and responsive Housing Finance Companies.

Eligibility

The eligibility criteria for NRIs are different from RIs and are based upon the following parameters.

Age: The loan applicant has to be 21 years of age.

Qualifications: Graduation is a pre-requisite for NRI loan seekers.

Income: Monthly income not less than $ 2000 (varies from one HFC to another). Stability of employment or business also determines eligibility.

Payment options: EMIs (Equated Monthly Installments) have to be paid only through NRI’s NRE/NRO account and not through his savings account in India.

Number of Dependents: Number of NRI dependents, assets and liabilities also determine eligibility.

NRIs can avail of home loans ranging from Rs 5 lakhs upto Rs 1 crore based upon his ability of repay and the property cost which can be determined by the Home loan provider’s priority.

NRIs will be eligible for a maximum of 85% property cost or cost of construction as applicable and 75% land cost, if land is being purchased.

NRI can also apply for loan alongwith a co-applicant with a separate income source. NRIs have to pay an extra 0.25% - 0.50% interest on home loans compared to resident Indians. There is also a negative criterion based upon location in HFC guidelines and NRIs hailing from those locations find it difficult to avail loans.

RBI directive loans

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRI), purchasing Immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittances 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 home loan amount to not exceed 85% of cost of home unit. Balance 15 % to be own contribution towards the cost of unit financed.

The 15% own contribution in addition to the loan amount can be met from direct remittances from abroad through normal banking channels, the Non- Resident (External) (NR(E)) account and / or Non-resident (Ordinary) (NR (O)) account in India.

However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-resident (External) (NR(E)) account and / or Non-resident (Ordinary)(NR (O)) account in India.

The repayment option for NRIs as 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. As most of the home loan provider companies consider the economic stability of the applicant, home loans for NRIs are quite feasible, because they are an economic resource.

Documents required for Loan

Non-resident Indians are required to submit additional documents as compared to resident Indians, like the copy of the passport and a copy of the works contract etc, besides follow certain eligibility criteria in order to get home loans in India.

The Power of Attorney (POA) is also a vital document required while processing an NRI home Loan because in the absence of the NRI’s physical presence in India, a local representative is needed to deal on behalf of the NRI. The POA representative is usually the NRI’s parents, wife or children, although it is not statutory.

The documents needed for obtaining NRI home loans :

• Passport and Visa
• A copy of the appointment letter and contract from the company employing the applicant. The labour card/identity card (translated in English and countersigned by the consulate).
• If the person is employed in the Middle East, Salary certificate (in English) specifying, name, date of joining, designation and salary details.
• Bank Statements for the last six months.
• List of Classified documents for Salaried and Self Employed NRI Applicants.

Salaried NRI Applicants	Self-Employed NRI Applicants
Copy of valid passport showing VISA stamps.	Passport copy with valid visa stamp.
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 equivalent document.
Overseas Bank A/c  for the last 3 months showing salary credits.	6 months overseas bank account statement and NRE/NRO account.
Latest contract copy evidencing Salary Certificate / Wage Slips	Computation of income, P&L account and balance 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)

Property Documents

• Original title deeds tracing the title of the property for a minimum period of the last 13 years.
• Encumbrance Certificate for the last 13 years
• Agreement of sale / construction, if any.
• Receipts for payments made for purchase of the dwelling unit.
• Approved plan/license
• ULC clearance/conversion order etc.
• Receipts for having invested the margin money through normal banking channels from
• the Non-resident (external) account in India and / or the Non- Resident (ordinary) account in India.
• Latest tax paid receipt.
• Allotment letter from the co-operative society / association of apartment owners.
• Agreement for sale / sale deed / detailed cost estimate from Architect / Engineer for
• property to be purchased / constructed / extended / improved.
• Copy of approved drawings of proposed construction / purchase / extension.

Payment Terms

• Non-resident Indians holding Indian passport do not require any permission from RBI for acquiring immovable property for bonafide residential purposes.
• Non-resident Indians holding Indian passport may pay the purchase consideration either by remittance of funds from abroad through normal banking channels or out of NRO/NRE/FCNR account.