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

Indians employed abroad, carrying on business or vocation abroad or living abroad for an uncertain duration of stay.

Government servants posted abroad on government duty with the Indian mission or similar government agencies.

State Government and Public Sector Undertaking officials deputed abroad on temporary assignments or posted to their branches or offices abroad.

Government servants deputed abroad on assignments with foreign governments or regional International agencies like the World Bank, International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific.

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.

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.
  • Latest tax paid receipt.
  • property to be purchased / constructed / extended / improved.
  • Copy of approved drawings of proposed construction / purchase / extension.
  • Agreement for sale / sale deed / detailed cost estimate from Architect/ Engineer for
  • Allotment letter from the co-operative society / association of apartment owners.
  • The Non-resident (external) account in India and / or the Non- Resident(ordinary) account in India.
  • Receipts for having invested the margin money through normal banking channels from.
  • 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.

    The documents needed for obtaining NRI home loans :

  • Passport and Visa
  • Bank Statements for the last six months.
  • List of Classified documents for Salaried and Self Employed NRI Applicants.
  • If the person is employed in the Middle East, Salary certificate (in English) specifying, name, date of joining,      designation and salary details.
  • 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).
  • 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.

    Salaried NRI Applicants

  • Copy of valid passport showing VISA stamps.
  • Overseas Bank A/c for the last 3 months showing       salary credits.
  • Latest contract copy evidencing Salary Certificate /       Wage Slips
  • Copy of valid visa / work permit / equivalent       document supporting the NRI status of the proposed       account holder.
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