Financial Corner

by : addi vardhaman

All banks follow the RBI specifications to define an NRI as an Indian citizen, possessing an Indian Passport, staying abroad for employment, vacation or business. It also includes those persons intending to stay abroad for an uncertain period of time.

These persons are eligible for getting loans to construct houses, follow their educational plans and purchase cars. Suvidha is a multi-purpose loan against mortgage of immovable properties-which does not include agricultural land, farm houses and plantations owned by the NRIs/PIOs-against their names.

NRI Housing Loans are very popular of these loans. NRIs are eligible for loans meant to construct, borrow/refurnish/change in the design of a house or for purchasing a piece of land in order to build a house. All NRIs having a regular monthly income of more than Rs. 10000/- and their close relatives and spouses-jointly enjoying the residential status with the NRIs-are eligible for these loans. The RBI has laid down detailed criteria regarding the eligibility for the amount of loan, margin, interest rates, disbursement plan, repayment structure, security, processing charge,insurance, the list of papers to be submitted to the bank, income proofs etc.

The interest rates for NRI loans do not differ much from that of resident Indians. But the loans are sanctioned for a lesser period. NRIs can get only 85% of the total cost of home as a loan. Also the amount depends upon his/her repayment capacity. Normally, up to 36 times of the gross monthly income of the borrower is issued as a loan; which is but capped by a maximum limit.

The rates of interest charged by the housing finance companies differ depending upon ones personal status. The FDI Policy allows FDI up to 100% from foreign/NRI investors through automatic route. Thus the banks have lucrative NRI housing schemes to cater to the housing requirements of the NRIs.

However the NRIs must take due care while opting for home loan financing companies (HFCs). Because of the geographical distances involved, it is necessary that the credit seekers take up a caring and responsive HFC.