The Reserve Bank of India (RBI) allows Non-Resident Indians (NRIs) to purchase any residential or commercial property in India, without seeking any special permission from the country’s central banking institution. NRIs are not even required to communicate or inform the RBI about the same. Under the Income Tax laws and current general permissions, NRIs can purchase any number of residential or commercial properties as they please. If an NRI is unable to be present in India, all purchase documents can be produced on his behalf by any person who he appoints as the authority of the power of attorney.
The only exception to the rule of property purchase for NRIs is that they cannot purchase agricultural land, plantation properties, or farmhouses in India without taking proper approval and consent from the RBI. The RBI will consider the applications on a case-to-case basis. Moreover, an NRI is also allowed to own property in India jointly with another NRI. However, a resident Indian or any person, not allowed to invest in property in India, cannot become a joint holder, irrespective of her/his contribution to the purchase. NRIs should be aware of the legal provisions about property purchase and ownership of immovable property in India under the Foreign Exchange Management Act (FEMA).
HOME FINANCING OPTIONS FOR NRI BUYERS
When an NRI decides to purchase property in India, he/she must be aware of the several regulations that govern how the purchase could be financed. The first and the foremost thing to understand is that the money for the property purchase should come through banking channels only. The NRI may also use money in his FCNR (foreign currency non-resident) account or NRE (non-resident external) rupee account, maintained in India. He/she may also avail home loans in Indian currency from housing finance companies and banks. The home loan may also be granted by the Indian employer of the NRI.
Almost all popular Indian banks offer home loans to NRIs for purchase of property, non-agricultural land, and construction of a house in India. The home loan application may be made online or offline. The documents required to be submitted depend on the person’s country of residence and whether he is self-employed or salaried, although copies of visa and passport, passport-sized photographs and proof of residence in the country mentioned must be submitted in all cases. To avail the home loan, the NRI has to fulfil a minimum period of stay in the country mentioned. In certain cases, banks may also insist on an NRI guarantor or a co-applicant. The guarantor must also submit all address, income, and identity proofs.
METHODS TO SERVICE THE HOME LOAN
NRIs should use a proper banking channel to pay the equated monthly instalments (EMIs) through remittances from outside India. His/her NRO, NRE or FCNR account may also be debited. If money is transferred to the NRO account from dear relatives, it could be used to service the home loan. In case the property is purchased for self-occupancy, it is possible to take a loan against the NRE or FCNR account deposits to service the home loan. The amount allowed is up to ₹1 crore. NRIs may repatriate some of the funds, but the maximum number of properties for which he/she may remit money to India is limited to two. The repatriated amount should not exceed the amount received as remittances for purchase or servicing the loan. NRIs are allowed to remit a maximum of $1 million out of India from the FCNR, NRE and NRO accounts.