Settling back in the parent country in a lavish house in a posh locality is a dream sought by many NRIs. Some of them want to convert the properties in India into business, while others simply want to fund themselves to buy a classy home.   

NRI investment in real estate of India brings about $11 Billion to Indian economy hence, it’s something that the government incentivizes. Therefore, there are a number of ways by which NRIs can get financial assistance from within India.

The major source of Finance for NRIs

On a whole, the financing scheme that is widely available and easily covers the financing needs is a loan.

NRIs are eligible to take house loans or property loans from Indian banks on meeting certain criteria and can pay it back using their NRE account outside of India.

Let’s understand how this process works.

Who is an NRI?

In order to obtain loans in India, the applicants must fall under the right category of an NRI. Here are a few definitions that match the same.

  • Indians who stay and spend most of their time in a foreign country where they’re employed or carry out a business. Their duration of stay in India is indefinite.
  • Indian citizens who live and work abroad with facilitation from a government institution. They could be on a government setup mission or serving a specific salaried position abroad.  
  • Government employees serving in the international bodies such as the World Bank, or the International Monetary Fund.
  • State officials who are on temporary stay outside of the country due to job responsibilities.   

So, you’ll now have a better understanding of the people pertaining to the NRI status.

For what all things are NRI property loans available?

NRI loans are available for;

  • Building a new house
  • Purchasing an already built house or flat
  • Purchasing land assets (non-agricultural)
  • Purchasing or building commercial properties
  • Purchasing agricultural land for building a house on it   

NRIs can’t buy agricultural land or vineries in India but they can be inherited by them if the legal stature is duly met.

The norms for purchasing these properties apply to NRIs in the same way as they apply to an Indian citizen. There could be specific schemes offered by private banks or other firms that may differ slightly from one another.

Usually, banks require a stay of 182 days in India for financing the property loans. NRIs can also mortgage other properties to obtain loans for investment in India.

Sources of Obtaining Loans in India for NRIs

The primary source of loans in India is the bank. There are several banks that fund property investment needs, while some provide personal loans as well. Banks are the best source of funding for NRIs as they offer attractive schemes as issued by the RBI.

Most popular banks that provide NRI property loans are;

  • Standard Chartered
  • State Bank of India
  • Federal Bank
  • Axis Bank
  • ICICI Bank
  • Canara bank
  • Citibank

There are provisions for personal loans as well, but those are offered at higher interest rates and aren’t deemed fit for NRIs to buy properties in India.

Eligibility for NRI Loans for Property in India

Just like other citizens, NRIs are offered loans based on their employment and business status. Loans are offered to both salaried and self-employed NRIs based on certain factors.

Although most banks have their own guidelines for offering NRI loans, there is a universal eligibility criterion that all the banks demand. It goes as follows;

The NRI should be at least 21 years of age.

The NRI must hold a graduate degree whether from India or abroad.

A constant income of around $2000 is expected from the NRI from an established source of income, either own business or a reputed organization abroad. The value of income may vary from bank to bank but the ballpark figure is the same.

The payment of EMIs for loans is only allowed through an NRE or an NRO account. Personal accounts in other banks aren’t eligible.

Meeting the above conditions doesn’t guarantee the eligibility as there are other factors such as assets, co-dependents etc that go in the final decision.  

Documents Required for NRIs

There are certain documents that must be presented by NRIs at the time of application. The application can be filed online or offline by visiting a bank. The documents are required for the proof of employment status and also to preserve the NRI identity in an Indian bank. Breakdown of major documents is given below.

Common Documents for both salaried and self-employed NRIs are as follows;

Copy of Passport with a Visa Stamp

Evidence of NRI statuses such as work permit or foreign trade license.

Specific for Salaried individuals

Copies and proofs of a foreign bank that the individual draws the salary in.

Copies of the salary slip from past three months.

Additional Proof of employment such as joining or service letter may be required.

Specific for Self Employed individuals  

Copies of an overseas business account that is used for the flow of funds.

Copies of 6 months of transactions from the same business account.

Income reports and P&L account reports certified by a professional CPA.

Loan Guidelines Issued by the RBI

The RBI also issues a number of guidelines or policies that govern the loan mechanism for NRIs. These laws can be treated as the thumb of rule for most of the organizations that offer loans in India.

The bank can only fund 85% of the total amount, rest 15% is for the NRI to fulfill.

The 15% stake must be paid by the NRI through their NRE or NRO account in India.

The remittance of loan can only be paid via the NRE or NRO accounts.

Conclusion

NRI property investment in India is a thriving business commodity and has the potential to boost the economy in a number of ways. For the same reason, getting loans for investing in land assets in India has been made easier for the NRIs through various banking channels and FDI policies.

If you’re an NRI, you must consider the above-mentioned tips before buying a property in India.

Contact Spacio Realtors for detailed banking assistance and finding the best property as per your preferences in India, from around the world.

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