NRI Real Estate Corner

NRIs holding an Indian passport do not need RBI approval to acquire immovable property for genuine residential use, since Section 31 of FERA, 1973 does not apply to them. The purchase price can be settled either through an inward remittance from abroad via normal banking channels, or by drawing on an NRO, NRE, or FCNR account.

Foreign citizens of Indian origin, on the other hand, must declare any residential or commercial property purchase to the RBI within 90 days, using Form IPI 17. This declaration should be accompanied by: a certified copy of the purchase deed (or a certificate from the co-operative housing society or apartment owners' association) confirming the property has been transferred or registered in the declarant's name; and a certificate from the declarant's Indian bankers confirming receipt of the inward foreign exchange remittance, or evidencing that funds were drawn from the declarant's NRE/FCNR account (or FCNR Special Deposit Account) to pay for the property.

If a foreign citizen of Indian origin intends to fund a new purchase using proceeds from the sale of another property, prior RBI approval is required, sought by submitting Form IPI 1.

There's no cap on the number of properties an NRI can acquire — irrespective of passport status — so long as each is intended for genuine residential use.

Under Section 29 of the Foreign Exchange Regulation Act, 1973, the RBI has issued a General Permission allowing foreign citizens of Indian origin and Indian citizens residing abroad to lease out their residential or commercial properties. Rental income, and any returns generated by investing it, can be repatriated abroad once the applicable income tax has been settled.

Home Loans

The term "Non-Resident Indian" derives its legal standing from the Foreign Exchange Regulation Act, 1973, and banks and housing finance companies define it in line with RBI guidance: an Indian citizen holding valid documents such as an Indian passport, who lives abroad for work, business, or vocation — or under circumstances suggesting an indefinite period away from India — qualifies as an NRI.

Broadly speaking, the following categories of NRIs qualify for housing loans designed for non-residents:

Indian citizens living abroad for employment, business, or vocation, or for any other reason suggesting an indefinite stay overseas;

Government officials posted abroad with Indian missions or other government-established agencies overseas, drawing their salary from government funds;

Government officials deputed to assignments with foreign governments or international bodies such as the World Bank, IMF, WHO, or ESCAP;

State government officials and employees of public sector undertakings on temporary overseas assignments, or posted to branches/offices abroad.

Documentation for resident and non-resident borrowers differs in certain respects. NRI home loans can fund the construction of a new house or flat, the purchase of an existing one, additions or alterations, and repairs or renovations — and an existing residential property can also be mortgaged to secure a loan. That said, NRIs must satisfy certain residency conditions under the Income Tax Act: either a stay of 182 days or more in India during the relevant assessment year, or a cumulative stay of at least one year.

The FDI policy permitting up to 100% foreign/NRI investment under the automatic route has further boosted confidence among NRI buyers, and banks now offer dedicated housing schemes tailored to their needs — with housing finance companies providing repayment structures designed around an NRI borrower's circumstances.

Finally, NRIs should choose their lender carefully. Given the distances involved, it matters a great deal that the housing finance company you work with is responsive and proactive throughout the process.

Eligibility for NRI

NRI eligibility criteria diverge from those for resident Indians on a few key parameters:

Age — applicants must be at least 21 years old.

Qualification — a graduate degree is required.

Income — a minimum monthly income of $2,000 is generally expected, though this threshold can vary between HFCs, and your eligibility is also weighed against the stability and continuity of your employment or business.

Payment routing — EMI payments must be routed through your NRE or NRO account; payments from any other source, such as a domestic savings account, are not permitted.

Dependants — the number of dependants, along with your existing assets and liabilities, also factors into the eligibility assessment.

Loan amounts for NRIs typically range from ₹5 lakh to ₹1 crore, depending on repayment capacity and the cost of the property — though this range can vary by lender. Loan tenure for NRIs also tends to differ from that offered to resident Indians. Financing is generally capped at 85% of the property's cost (or construction cost, as applicable), and at 75% of the land cost where land alone is being purchased, subject to the borrower's repayment capacity.

Bringing in a co-applicant with an independent income source can boost eligibility, though it's worth noting that interest rates for NRI home loans usually run 0.25%–0.50% higher than those for resident Indians. Some HFCs also maintain an internal "negative list" of locations, and NRIs based in such locations may find it harder to secure financing.

RBI directive loans

The RBI has clarified that NRIs and Persons of Indian Origin (PIOs) buying immovable property in India should fund the purchase using money received via normal banking channels, through inward remittance from outside the country.

NRIs, like resident Indians, may acquire any immovable property in India except agricultural land, plantations, or farmhouses. The RBI has also issued specific directives governing the sanction of home loans to NRIs:

The loan amount cannot exceed 85% of the dwelling unit's cost — the remaining 15% must come from the borrower's own contribution.

This own contribution can be funded through direct remittances from abroad via normal banking channels, or from an NRE and/or NRO account held in India.

Loan repayments — principal, interest, and all associated charges — must similarly be remitted to the HFC through normal banking channels from abroad, or via an NRE and/or NRO account in India.

NRIs can also repay using funds held in any non-resident account maintained under the Foreign Exchange Management Act, 1999, and the RBI regulations issued under it. Since most lenders factor in an applicant's overall financial stability, home loans remain a practical option for NRIs, many of whom are well placed financially.

Documents required for Loan

NRI applicants must submit a somewhat more extensive set of documents than resident borrowers — including a copy of their passport and a copy of the works contract, among others — in addition to meeting the standard eligibility criteria for home loans in India.

A Power of Attorney (POA) is another key document in processing an NRI home loan. Since the borrower isn't based in India, the lender often needs a local representative able to act on the NRI's behalf when required. While not strictly mandatory, the POA is typically executed in favour of the applicant's parents, spouse, or children.

The documents typically required to process an NRI home loan include:

Passport and Visa

A copy of the applicant's appointment letter and employment contract.

If employed in the Middle East, a labour card or identity card translated into English and countersigned by the consulate, along with a salary certificate (in English) stating name, date of joining, designation, and salary details.

Bank statements for the preceding six months

Document checklist, classified by applicant type:

For salaried NRI applicants:

For self-employed NRI applicants:

A copy of a valid passport showing visa stamps

A passport copy bearing a valid visa stamp

A copy of a valid visa, work permit, or equivalent document establishing the applicant's NRI status

A brief profile of the applicant's business, along with a trade licence or equivalent document

Overseas bank account statements for the last three months, showing salary credits

Six months of overseas bank account statements, together with NRE/NRO account statements

A current contract copy, salary certificate, or wage slips evidencing income

Income computation, profit-and-loss accounts, and balance sheets for the last three years, certified by a Chartered Accountant, CPA, or equivalent authority (or equivalent company accounts)

Property Documents:

• Original title deeds establishing a clear chain of ownership for at least the preceding 13 years
• An Encumbrance Certificate covering the last 13 years
• The agreement for sale or construction, where applicable
• Payment receipts for the purchase of the dwelling unit
• The approved building plan or licence
• Urban Land Ceiling (ULC) clearance, conversion order, or equivalent
• Receipts confirming that the margin money was paid through normal banking channels, from an NRE and/or NRO account held in India
• The most recent property tax receipt
• An allotment letter issued by the co-operative housing society or apartment owners' association
• The agreement for sale, sale deed, or a detailed cost estimate from an architect/engineer, for the property being purchased, constructed, extended, or improved
• A copy of the approved drawings for the proposed construction, purchase, or extension

A photocopy of the PIO card.

If a PIO card isn't available, photocopies of any one of the following will suffice:

A current passport showing "India" as the place of birth

A previously held Indian passport, if applicable

An Indian passport, birth certificate, or marriage certificate belonging to a parent or grandparent, supporting the applicant's claim to Indian origin.

Q: Do NRIs or foreign citizens of Indian origin need RBI approval to buy residential property in India?

A: No. The RBI has issued a general permission allowing foreign citizens of Indian origin — whether they live in India or abroad — to purchase immovable property for genuine residential use, so no case-by-case approval is needed.

Q: How should the purchase amount be paid under this general permission?

A: Payment can be made either through an inward remittance of foreign exchange via normal banking channels, or from funds held in an NRE or FCNR account with an Indian bank.

Q: Are there any formalities to complete after the purchase?

A: Yes — a declaration in Form IPI 7 must be filed with the RBI's Central Office in Mumbai within 90 days of the purchase (or the final payment, whichever is later), accompanied by a certified copy of the transaction document and a bank certificate confirming the consideration paid.

Q: Can this property later be sold without RBI permission?

A: Yes, general permission covers the sale as well. If the buyer is another foreign citizen of Indian origin, the purchase funds must either be remitted into India or paid from an NRE/FCNR account balance.

Q: Can the sale proceeds be remitted out of India?

A: For residential properties bought on or after 26 May 1993, the RBI will consider repatriation of sale proceeds — up to the original foreign exchange consideration — for a maximum of two such properties. Any surplus, or proceeds from properties bought before that date, must be credited to the owner's ordinary non-resident rupee account instead.

Q: What conditions apply to repatriating the sale proceeds?

A: Repatriation requests are considered only if the sale occurs at least three years after the final purchase deed or the last instalment payment, whichever date is later.