Buyers Guide » NRI Loans
Are you a Non Resident Indian (NRI)? And your dream is to purchase a flat in a beautiful residential apartment near Hi-tech City, Hyderabad? You probably need a Home Loan. The following things should be considered before you go on searching for right home loan offer:
Who is a Non-resident Indian?
A Non Resident Indian (NRI) is an individual who is an Indian Citizen but has migrated to another country permanently or temporarily for the purpose of Employment, Education etc. Other terms, commonly used for an NRI are Overseas Indian, Expatriate or Indian Expatriate.
What can a NRI buy?
Non Resident Indians can purchase any immovable property in India except agricultural land, farm house and plantation. NRIs can also avail Home Loan to purchase property. Though it’s called NRI Home loan, it’s just like the loan offered to the resident Indian in many respects. Each bank will maintain a data base of approved places. NRIs working in places which are in negative profile may not be able to get Home Loans.
- In order to get loan, NRI must be a graduate. Educational qualification may not be a constraint for resident Indians.
- Most of the Banks stipulate that the NRI should have a monthly income of $ 2,000 per month. This yard stick may vary from bank to bank.
- NRIs need to submit certain additional documents like copy of the passport, a copy of the works contract.
- A Resident can pay through post dated cheques or through savings bank account. But NRIs should repay the loan through Non Resident External (NRE) or Non Resident Ordinary (NRO) account cheques only.
- Resident Indians can avail loan for tenure up to a maximum of 240 months. But, NRIs loan term is 180 months maximum. In fact some banks restrict it for 120 months only. Maximum term for NRI home loans varies from bank to bank.
- NRIs not based in India and they may not be in position to sign on all papers and enter in to agreements for the purchase of apartments in Hyderabad. So, they need to submit a power of attorney to get a housing loan.
Present job profile, Educational and professional qualifications, experience, probability of continued stay in abroad till the loan repayment is taken into account.
How much loan can an NRI or PIO get?
An NRI or PIO can get a Home Loan of up to 75-80% of the Total Consideration Value of the property.
What are the documents?
- Visa stamped on passport
- Copy of the employment contract
- If the contract is in any language other than English, the same has to be translated into English and counter signed by the employer/Indian Embassy.
- Latest salary slips (Certified) for the past 6 months.
- Identity card issued by the present employer.
- Continuous discharge certificate (if applicable)
- Latest work permit.
- If you are working in merchant navy, contract slip with income details.
- Copy of the local income tax returns.
- Non Resident External (NRE), FCNR, NRO and International account passbook sheets.
- Overseas Bank account statement for the past six months.
- Bio data details about educational qualifications, age, job experience and profession/business with proof.
- Power of attorney in favour of local representative in India.
Property Documents required for purchase of a flat from a reputed builder in Hyderabad
- Title deeds of the builder/land owner for a period of last 13 Years
- If the land is developed by the builder, development agreement between the builder and land owner.
- Power of Attorney executed in favour of the builder, if applicable.
- An Encumbrance Certificate (EC issued by the concerned sub registrar) for the past 13 years.
- Khasra Pahani (a document indicating ownership of property as entered by the revenue authorities)
- A sanctioned plan.
- An agreement for sale and a construction agreement with the borrower.
In case, if you are in India, the Power of Attorney can be locally notarized. Normally Wife, Husband, Father, Mother, Brother, Sister can be given the power of attorney. The power of attorney holder does not have the power of dealing with the property. He or she gets the powers that you clearly mentioned in the power of attorney.
- Passport size photograph.
- Copy of your passport, PAN card, Driving License, SSC – School leaving certificate, Birth Certificate, LIC Policy.
- Bankers sign verification.
Who is a Person of Indian Origin (PIO)?
Any person who was born an Indian Citizen, but over time has chosen the citizenship of another country is considered a Person of Indian Origin (PIO).
Are Non Resident Indians (NRIs) & Foreign Citizen of Indian origin (PIOs) allowed to acquire or dispose immovable property in India?
Yes! The Reserve Bank of India has clearly granted permission to all Non Resident Indian's (NRIs) & Foreign Citizens of Indian origin (PIOs) to acquire & dispose immovable property in India, be it Residential or Commercial Property. However the RBI has a restriction on the purchase of Agricultural Land/Plantation Property or Farmhouses in India.
What method should an NRI or PIO use in order to purchase a property in India?
An NRI or PIO can purchase a property either through an inward remittance in foreign exchange through normal banking channels or through the funds available in the NRE/NRO/FCNR accounts maintained in India by the Investor.
Do you require the permission of the RBI to transfer immovable property in India?
No! NRIs and PIOs do not require the permission of the RBI in order to transfer immovable property to any Indian Citizen, NRI or PIO.
Can the properties (Residential/Commercial) be given on rent if not required for immediate use?
Yes! There is no clause by the RBI, which restricts an NRI or PIO to rent the properties acquired by them. The amount received from rentals can also be repatriated back to the country they are residing in, without any restriction.
Can sale proceeds of immovable property be remitted out of India?
Yes! The sale proceeds of immovable property can be remitted out of India to the home country of the NRI or PIO, up to the maximum limit of the consideration amount originally remitted from abroad to purchase the property. However, the property has to be sold after a period of three years, from the date of the final purchase deed or from the date of payment of final instalment of consideration amount, whichever is later.
Additionally, the following points also need to be adhered to in this respect:
i. The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Laws in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999.
ii. The amount to be repatriated does not exceed the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in foreign currency non-resident account(s) or the foreign currency equivalent, as on the date of payment, of the amount paid where such payment was made from the funds held in non-resident external account(s) for acquisition of the property; and in case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.
iii. Finally, application for the purpose of repatriation is required to be made to the Central Office of Reserve Bank within 90 days of the sales of property in Form IPI 8.
Can an NRI give a Power of Attorney to a person in India for completion of loan formalities on their behalf?
Yes! NRIs can definitely appoint a Power of Attorney to complete all loan formalities towards the purchase of a property in India, considering the fact that an NRI wouldn't be in India for long periods. The stringent formalities followed by Indian banks, only means that the appointment of a Power of Attorney would be ideal.
What are the conditions if the power of attorney is being executed outside India?
It is advised that the Power of Attorney is preferably a Resident of India. Having said that, there would be certain procedures which have to be followed in order to execute the same:
i. The execution of the power of attorney must be done on a stamp paper or plain paper, as the case may be in the country where the power of attorney is being executed.
ii. The signatures of the executants have to be attested by an official of the Indian Embassy, Indian Consulate or Trade Commissioner, in the country where the executants reside.
iii. The signature of the attorney should be verified in India by a Notary, his employer or his banker on a separate piece of paper which should be submitted to SHFL together with the Power of Attorney.
Can an NRI purchase a Property by means of borrowing money from a close relative outside India?
Yes! An NRI can purchase a Property by means of borrowing money from a close relative outside India. However, the sum borrowed should not be in excess of US$250,000 or its equivalent, subject to the conditions that:
i. The minimum maturity period of the loan is one year;
ii. The loan is free of interest
iii. The amount of loan is received by inward remittance in free foreign exchange through normal banking channels or by debit to the NRE/FCNR account of the NRI.
According to the RBI guidelines a Close relative' means relative, as defined in Section 6 of the Companies Act, 1956.
A person shall be deemed to be a relative of another if, and only if:
i. They are members of a Hindu undivided family or
ii. They are husband and wife or
iii. The one is related to the other in the manner indicated in Schedule IA.
Can NRIs purchase a house or flat for residential purpose through the help of Financial Institutes in India?
yes! The RBI has granted permission to financial houses to provide loans to NRIs for the acquisition of house/flats for self occupation, subject to banking terms and conditions. Although, the repayment of the loan needs to be completed within a 15 year period, through inward remittances or out of the funds held by the investors in their respective NRE/NRO or FCNR Accounts.
Is it possible for NRIs/PIOs to acquire or dispose off Residential/Commercial Property by way of gift?
Yes! The Reserve Bank of India has not applied any restrictions on NRIs or PIOs to acquire or dispose residential/commercial property, by way of gifts to other Indian citizens, NRIs or PIOs, unless the immovable property is an Agricultural Land/ Plantation Property or Farmhouse.