Non-Resident Indians (NRIs) are investing in residential real estate, specifically in large Indian cities, to build a back-up base in the country. Many NRIs intend to set up businesses in these cities in the future.
Motivations for Investment
The desire to own a home in India is a means for NRIs to stay connected to their motherland. Some NRIs make these investments purely for financial reasons without considering eventual relocation.
Impact of the Global Financial Crisis
During the 2008-2009 global financial crisis, India's financial stability encouraged NRIs to consider buying homes in India.
Regulations and Investment Options
NRIs face no restrictions on the number of commercial or residential properties they can own in India. However, they are allowed to repatriate the sale proceeds of only two units through normal banking channels. They can invest in real estate through:
- Transfer funds to India
- Invest through Non-resident External (NRE)/ Foreign Currency Non Resident (FCNR)/ Non-resident Ordinary Rupee (NRO) accounts
Payment via traveler’s cheque or foreign currency notes is not permitted.
Financing Options
NRIs can avail home loans from Indian institutions approved by the National Housing Bank (NHB). Loan repayments can be made through inward remittances, debit to NRE/FCNR/NRO accounts, or through rental income earned in India. They can also apply for home loans from their employers in India, provided they meet specific terms and conditions listed by the Reserve Bank of India (RBI).
Mortgaging and Renting
NRIs are allowed to mortgage their residential property in India with an Indian financial institution without any approval from the RBI. They can also mortgage it with a foreign financial institution with prior approval from the RBI. Additionally, they can rent out their residential property without the approval of the RBI, and the rent received can be credited to NRO/NRE accounts.