Different Personal Loan options for NRIs

NRI loans are the most common source of funding for Indian citizens living abroad. Almost all the major banks provide banking facilities to NRIs, which include banks accounts, loans, remittance and other related forex services.

Though the Reserve bank of India dies not restrict banks from offering personal loans to NRIs, banks have their own policies where they decide whether they will offer personal loan options to NRIs. Since personal loans are unsecured, banks do not want to take the risk of extending unsecured loans to someone who does not live in this country for most of the time. Banks would face recovery and repayment issues if NRIs do not repay loans in time and this would be costly for banks.

However, SBI and South Indian Bank have featured personal loan products for NRIs on their websites, which require only a third party guarantee to give loans. Banks provide about 50% of the amount lying in the account as loan. This margin, however, depends on the internal policies of the bank.

According to South Indian Bank’s website the loan amount would be ‘50% of the average annual remittance to their NRI account /spouse’s domestic account (excluding bulk remittance) subject to a maximum loan of Rs. 3.00 lacs.’ However, SBI’s website spells out ‘Maximum of 48 times of Net Monthly Income (NMI) or 4 times of Net Annual Income (NAI) with separate caps for purchase of plot and furnishing / consumer durables subject to repayment obligations not exceeding 50% of NMI / NAI.

Although banks do not have personal loan options for NRIs, they are keen on offering secured loans to NRIs, which include loans against deposits as well as home loans.

Loans against deposits include any fixed deposits that NRIs have made with the concerned bank, or deposits in NRE and NRO accounts. Banks mark lien on this deposit, which means the NRI would not be able to withdraw this money until he/she repays the loan in full.

Banks offer home loans to NRIs for Construction / Purchase of New House or Old House/ Flat, Purchase of plot for House Construction, repairs and renovation of House. These loans are provided to NRIs above 21 years of age and who have completed their minimum stay abroad, the time period is decided by banks and is subjective. Banks also seek minimum income criteria and would require valid documents to prove the same.

Other documents that banks require include passport, work permit, appointment letter, experience certificates, salary certificates, and remittance proof for past 6 months/1 year. Other than these, banks will require complete documents related to the property that you wish to mortgage.

Most banks require the NRI extending Power of Attorney of the property a well the loan to a local resident close enough I blood relation with the NRI.

The loan amount does not usually have any upper limit, but is, however, fixed according to the NRIs repayment capability, adjudged from his income level.

Although personal loan options for NRIs are limited, almost all banks provide secured loans to NRIs.