When the common man thinks of buying a house, he typically looks for something that serves his immediate purpose as well as provides for him and his family a sanctuary that makes his life comfortable for as long as he’s residing in it. Of course, the fact that he also regards his home a nest egg and an immovable asset is also of prime consideration.

But then that just about sums up the criteria’s for a person who’s been residing and working in the same city (or country), perhaps not so much for an individual residing outside of it.

The norms alter perceptibly when it comes to NRI’s* (non-resident Indians) and as it goes with most NRI’s, the reasons for purchasing homes or plots in their homeland usually comprise of an emotional prerequisite for these individuals to own something that gives them a sense of belonging besides being a suitable investment avenue that will fetch them good returns over time.

Not much different from the case example of a resident Indian as cited above, however, radically different in one sense as the home/ plot becomes an ‘additional’ property that optimally serves their need whenever they are visiting their homeland or reaps them a good source of income in the form of rent as they’re not going to be residing in it permanently. Moreover, since there is an added motivation for them to purchase and create as many additional properties as desired (as there really is no constraint on the amount of properties that can be bought), NRI’s do find the option quite lucrative and worth their while.

* Who is an NRI?

Classified as an Indian citizen and possessing a valid Indian passport, an NRI is one who is living or working (has migrated) in a foreign country since over six months or more.

Let’s explore the framework within which NRI’s can invest and become owners of plots in India-

– The Reserve Bank of India’s norms are quite simple and matters pertaining to purchase/ sale etc come under the gambit of the Foreign Exchange Management Act (FEMA). Free to transact and purchase as many plots (or residential/ commercial properties) as an NRI so pleases, the FEMA states that an NRI need not seek authorizations in order to carry out any such dealing (exception being in case of inheritance cases). There are however a few regulations, namely, the individual in question is not permitted to buy farm house/ agricultural land/ plantation properties (specific permissions/ approvals will need to be sought in such cases).

– Seeking financial assistance by way of loan- It is an open secret that most banks and financial establishments find NRI’s to be a lucrative customer base. One of the reasons being that NRI’s have usually conducted their research and have exercised due diligence on the potentiality of making speedy decisions on plot/ property matters and (most importantly), come with the benefit of having at hand a handsome disposable income that is waiting to be put to good use. This is why most NRI’s find that banks and financial establishments give out financial assistance by way of loans quite simply and instantaneously too.

– There are certain caveats naturally, namely, the repayment is stipulated to be conducted through the normal banking channels or out of funds in his Non-resident External (NRE)/ Non-resident Non-repatriable (NRNR)/ non-resident Special Rupee (NRSR)/ Foreign Currency Non-resident (FCNR)/Non-resident Ordinary (NRO) account in the country (in India).

It is stipulated that the inward remittance is to be done via these avenues only. Moreover, the norms pertaining to the loan assistance also state that the NRI may seek out a loan of up to 75% of the amount via the bank/ financial institution, the balance is to be paid up by the borrower.

– A key factor that one must bear in mind here is that when a person is seeking out a loan for purchase of a plot, he will be offered financial assistance in the form of land loans. Here, he must state whether he is looking for a loan for acquiring the plot of land or for construction. What’s more, the borrower must bear in mind that these loans maybe obtained and one can claim tax benefits on them too, provided you’re seeking assistance for the construction aspect. If the borrower is seeking out a loan for acquiring the plot of land, he may have to enquire with different banks and financial establishments for the same, specifically with regards to tax saving benefits.