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The purchaser of the flats can be financed from the fresh remittance through the normal banking channels or out of funds in ordinary non-resident account or Non-resident (External) Account. When the flat is under construction it may be possible to get instalment facilities from the builder. Loan facility may also be availed for purchase of flats from authorized dealers or housing finance institutions approved by National Housing Bank.
Reserve Bank has granted general permission to authorised dealers and financial institutions providing housing finance which are approved by National Housing Bank to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions.
Repayment of the loan should be made by remittance from abroad or by debit in the investors' NRE/FCNR(B)/NRO/NRNR/ NRSR accounts or out of rental income derived from renting out the property acquired by utilization of loan. Further now repayment can also be made by close relatives ( as defined under section 6 of the Companies Act, 1956) of the borrower in India.
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NRIs can avail loan for buying or construction of a new home, extending or renovating/ repairing or improving an existing home or even to buy a plot.
Typically the security for the loan is first mortgage of the property to be financed normally by way of deposit of title deeds and / or such other collateral security as may be necessary. In addition interim security may be required, if the property is under construction. Collateral or interim security could be in the form of assignment of life insurance policies, surrender value of which is at least equal to the loan amount, pledge of shares and such other investments.
The non-resident Indians who are staying abroad may enter into an agreement through their relatives and/or by executing the Power of Attorney in their favour as it is not possible for them to be present for completing the formalities of purchase (negotiating with the builder or developer, drafting and signing of agreements, taking possession etc.). These formalities can be completed through some known person who can be given the Power of Attorney for this purpose. The Power of Attorney should be executed as per drafts provided by the housing finance company. Power of Attorney should be executed on the stamp paper before the proper authorities in foreign countries. Power of Attorney cannot be drafted on the stamp paper bought in India.
The RBI has granted general permission to NRI's and foreign citizens of Indian origin, to let out their immovable properties acquired for their bonafide residential purpose but which on account of their residence abroad, are not required for their immediate residential purpose.
There is no specific provision for remittance of rental income from immovable property. The rental income (net of applicable taxes) may be credited to the NRO account and then the same may be allowed to be remitted abroad. In case of NRIs not maintaining an NRO account in India, authorized dealers may allow repatriation of current rental income based on an appropriate certificate by a Chartered Accountant certifying that the amount proposed to be remitted is eligible for remittance and that applicable taxes have been paid or provided for. NRIs who do not maintain NRO Account and have no taxable income in India need not submit a chartered accountant's certificate for remitting rental incomes. They are simply required to furnish a declaration, in duplicate to the effect that he/she is not a tax payer in India
The Government announced a scheme for issue of Persons of Indian Origin (PIO) Cards for persons of Indian origin living abroad (in specified countries) and having foreign passports. The PIO cards, besides introducing a visa free regime, also confer some special economic, educational financial and cultural benefits to the holders of these Cards. Facilities have been extended for acquisition, holding, transfer and disposal of immovable properties for PIO Card holder in parity with that available to NRIs.
Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passport subject to certain conditions.
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Belani Group of Companies
