Loans for NRIs – The Complete Guide
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NRIs residing abroad can avail of loans for various types of expenses and investments in India. Whether you want to buy a home, a vehicle, or need personal funding, you can do so with loans for NRIs. By opting for such loans, you can benefit from comparatively lower interest rates and high repayment tenures.
Being an NRI comes with many perks, especially if you live in a foreign country where the market value of the currency is stronger than INR. Not only can you use your foreign earnings to invest in India, but you can also open specialised NRI bank accounts and deposits that come with several facilities. One of the most critical benefits you get from your NRI accounts and deposits includes applying for loans. In this article, we shall cover all the important aspects associated with loans for NRIs, including types of loans, eligibility criteria, the application process, and more.
Types Of Loans For NRIs And Comparisons
As an NRI, you can apply for almost all kinds of loans available to resident Indians. The only condition is the loan you take should be in service of something in India. For instance, you could be living abroad but may need to buy a car for your dependents in India. As such, you can apply for a Car Loan to buy a new or used car in India. You can apply for the loan against NRE deposits or through your NRE and NRO bank accounts in India.
Besides a Car Loan, you can take out a Two-wheeler Loan in India. You can just as easily apply for a Personal Loan to pay for all kinds of expenses – be it medical emergencies, wedding planning, vacation planning, and more. You can also buy, renovate, or construct a property in India by applying for different types of Home Loans for NRIs.
While Personal Loans are largely unsecured, i.e., you do not have to provide any collateral, other types of loans, including Two-Wheelers and Four-Wheeler Loans, and Home Loans are secured loans. The vehicle or property you buy through the loan is secured, i.e., the bank keeps it as collateral until you repay the loan. Also, the loan repayment duration for Personal Loans is typically up to 5 years, whereas those for Vehicle and Home Loans can be up to 7 years and 30 years, respectively.
Eligibility For NRI Loans
The eligibility criteria for loans for NRIs essentially depends on the type of loan the NRI needs. Broadly, it comprises the following:
- You should be a Non-Resident Indian as per the Foreign Exchange Management Act, 1999 or FEMA guidelines, i.e. you should be residing abroad for employment, vocation, or business and should intend to continue living overseas for an indefinite period or a period exceeding 182 days in a financial year.
- You should be a salaried employee working with a reputed organisation for at least two consecutive years (three for home loans) and earning a monthly net salary equivalent to INR 25,000 or more.
- You could also be a self-employed individual earning a net monthly income of over INR 25,000 and should be able to provide income proof documents (IT returns), verifying the same.
- You should be able to provide all the documents requested by the lender at the time of application.
Documents Required To Apply For Loans For NRIS
The documents you need to provide will depend on the type of loan you need. Typically, you have to provide a photocopy of:
- Your ID Proof showing your Indian and NRI residency status.
- Your Address proof documents verifying your address in India and overseas.
- Your income and employment proof documents.
- Property specific documents (for home loans) such as Society NOC, Sale deed, proof of property tax paid, etc.
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Things To Consider Before Applying For NRI Loans
Before you apply for an NRI Loan, you must keep the following in mind:
- Lenders may require you to apply for loans jointly with a resident Indian.
- Lenders may also need to assign a Power of Attorney (especially for Home Loans for NRIs).
- You should consider the tax implications associated with the loans, and the tax payable will be applicable in India.
- Your bank may allow you to take out a loan against NRE deposit if you have one.
- An NRE deposit increases your chance of getting a loan.
How to Apply for Loan against NRE Deposits?
If you have an existing NRE Deposit, your bank may allow you to leverage it while applying for a loan. The deposit can serve as security or collateral, and you can borrow funds of up to 95% of the deposit amount. You can apply for the loan against NRE deposits online, directly through your NRI bank account, where you can follow these steps:
- Visit the loan section and download the application form.
- Provide details of your NRE Deposits – the sums in your NRE Account or FD, account number, etc.
- Get your documents attested by your local bank or embassy and submit soft copies of the same along with your loan application form.
- Wait for the bank to verify your documents and disburse the loan amount.
Alternatively, you may call up the customer care helpline and find out ways to get the loan sanctioned in person, at the bank, through your resident Indian joint borrower.
No matter how many miles away you are from your homeland; you can get instant access to fund your specific and varied needs through a wide range of loans. Loans for NRIs are an incredible tool that helps you borrow at comparatively lower interest rates and higher tenures than you would get in your country of residence.
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*Disclaimer: This article is published purely from an information perspective and it should not be deduced that the offering is available from DBS Bank India Limited or in partnership with any of its channel partners.
The purpose of this blog is not to provide advice but to provide information. Sound professional advice should be taken before making any investment decisions. The bank will not be responsible for any tax loss/other loss suffered by a person acting on the above.