In India, an NRI can also avail loan i.e. Home
Loan. An NRI is a Non-Resident Indian, who lives offshore for the certain
period, for doing business or employment. All financial institutions or banks
or housing finance companies follow the definition of RBI for NRI customer. The
NRI customer should come under the act, i.e. FEMA (Foreign Exchange Management
Act), 1999. The NRI customer can use home loan for several of purposes, such as
for the house or plot or flat purchase, for house renovation, for house
construction and house extension.
The NRI home loan is somewhat similar to normal
home loan. In NRI home loan also, the banks provide the loan amount only up to
80% to 85% of the market rate of the house of flat or plot. The bank charge
normal home loan interest
rates, i.e. 10 to 16%, which depends on the loan amount and the customer’s
creditability. The NRI customer can avail home finance up to Rs.10cr. the bank
also charges the processing fee to the NRI customer, i.e.0.5% to 4% of the home
loan amount. The person must be offshore at least from last 1 year.
Though, banks provide home loan after checking
various documents of the NRI customer. The basic documentation is same i.e. the
customer has to give identity proof, residential proof, income proof,
employment details, and property documents. Besides these documents, the
customer has to submit other documents that are; visa copy, passport copy, work
permit copy, power of attorney and bank statement of Indian account.
The NRI customer must have an account in India,
if the person wants to avail the home loan in India. The person can have either
NRE or NRSR or NRO account in India. The NRI customer also has to give the
power of attorney to Indian resident, as that person can on behalf of NRI. The
NRI customer should be a graduate and has a minimum age of 21 years while
availing a home loan.
An NRI does not get any tax rebate on Indian home
loan, as the person is paying tax at offshore, i.e. paying tax to the country
where the person is currently living. Therefore, government of India does not
get any tax benefit to the NRI customer. However, the NRI can claim tax rebate
on the income that the person has earned in India.
