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With the slowing of the economy and low growth in loan advances, banks are looking for various ways to increase advances. A key focus area for banks is Non Resident Indians. With the government trying to go all the way to woo Non Resident Indians to use their capital and take part in India’s economy, banks have found easier to lend to Non Resident Indians.
The types of loan, which banks are willing to lend to Non Resident Indians include:
- Home Loans
- Home improvement/renovation loan
- Vehicle loans
As is the case with most expatriates, NRIs want to remain connected with their homeland. The best way to do it is by buying a home in India. Banks have understood this and the result is a plethora of schemes for NRIs for buying property in India. Home loans therefore make sense for NRI’s to utilize.
With liberal criteria for evaluating requests for the various loan categories, banks are keen to tap the NRI market. Such criteria includes, age of the applicant (which should be between 21 and 60). The tenure usually is less than the tenure offered to Indian citizens. So, if the typical tenure for Indian citizens is 20 years, it may be just 10 years or 15 years for NRIs. An annual income above USD 40,000 should usually suffice, but this varies as per the individual bank’s policy. As far as documentation is concerned, the borrower has to submit (apart from all the documents required for resident Indians) visa copies, passport copies, and foreign residence proof.
In home improvement loan scheme, banks provide loan for repair, improvement, or renovation of home. The criteria for home improvement loan are similar to other loan schemes. Vehicle loan is different, in some cases banks may allow NRIs to take loan, but need a resident Indian as guarantor. While some banks may allow NRIs to become a guarantor and avail the loan in the name Indian resident. In the second case, even though the NRI is included as a guarantor, he or she will pay the EMI.
A further liberalizing of the criteria is expected in the future.
SMA Legal is a boutique Legal Advisory Firm that specializes in high profile cases involving large Indian corporations, International companies with business interests in India, distinguished individuals & country missions to India. Read More