NRI FAQs
Who is a Non Resident Indian (NRI)?
Under the Foreign Exchange Management Act, 1999, Non Resident Indians are:
- Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an uncertain period of stay abroad; OR,
- Government servants who are posted abroad on duty with the Indian Mission and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; OR,
- Government servants deputed abroad on assignments with foreign government or regional / international agencies like the World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP); OR,
- Official of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.
What kind of Bank Accounts can be operated by NRIs.
Who can open and how?Non Resident (Ordinary) Account. An existing bank account of an Indian national going abroad and becoming a non-resident Indian is automatically designated as Non Resident (Ordinary) Account (NRO). An NRI can also open such ordinary accounts even by making remittances from abroad or by transfer from an existing non-resident account in India in his own name. Such accounts can be opened by overseas corporate bodies (OCBs). NRO accounts can be opened while an NRI is on a visit to India or simply by making remittances from abroad. NRO account can be in the sole name of an NRI or in joint names of more than one NRI or in joint names with any of the close relatives in India. In other types of joint accounts, prior permission of Reserve Bank of India (RBI) is required.
All types of transactions of deposits and withdrawals to and from NRO account are normally permitted. However, the RBI has prescribed certain transactions, which requires to be reported to RBI in prescribed forms.
Can these funds be repatriated?The funds can be freely withdrawn for the local disbursements without RBI approval. Interest is now repatriable.
Is interest earned exempt from tax?Interest on NRO account is not exempt from Income tax and balances to the credit of NRO account are not exempt from wealth tax.
The loan amount shall not exceed 85% of the cost of the dwelling unit.
For what purposes are loans available to NRIs?NRIs can avail loan for buying or constructing a new home, extending or improving an existing home or even for buying a plot.
What is meant by "Own Contribution"? How is "Own Contribution" to be paid?"Own Contribution" is the cost of the dwelling unit financed, less the loan amount. The "Own Contribution" should be met from direct remittances from abroad through normal banking channels or from the Non Resident (External) Account / Non Resident (Ordinary) or the Non Resident special rupee account in India.
The following documents are required along with the application form: Photocopy of the labour contract duly countersigned by your employer (translated to English for Non-English documents) Latest salary certificate (in English) specifying the following:
- Photocopy of the labour contract duly countersigned by your employer (translated to English for Non-English documents)
- Name (as it appears in the passport)
- Date of joining
- Designation
- Perquisites and salary
- Photocopy of labour card / identity card
- Photocopy of passport
- Photocopy of valid resident visa stamped on the passport
- Photocopy of last three months' monthly statements of local bank account
- Property related documents
What security will NRIs have to provide?
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.
Complete loan formalities on his behalf?Yes, normally it is desirable to appoint a Power of Attorney in India to represent him in dealings in India. The Power of Attorney should be executed as per drafts provided by the housing finance company. The Power of Attorney can be given to any person of his choice in India.
Can the house occupied by NRI be let out?The RBI has granted general permission to NRIs and foreign citizens of Indian origin, to let out their residential properties acquired for their bonafide residential purpose but which on account of their residence abroad, are not required for their immediate residential purpose. The rental income cannot be repatriated. Thus rental income must be credited to the NRO account / resident accounts in India.