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NRIs
show a marked preference for purchase of residential property
over commercial spaces for investment in India. Surveys
conducted in the USA amongst NRIs had only 9% of investors
interested in commercial property. The RBI does provide for
NRIs wishing to conduct business in India to procure loans
against commercial property
Loan against Bank
Deposits
Loans to buy commercial property for carrying out their
business activities are available to NRIs against the NRO, NRE
and FCNR (B) Term Deposits.
Banks may also grant Rupee loans to NRIs as per policy laid
down by the Bank's board, other than for activities like
business of chit funds, nidhi companies, agricultural or
plantation companies or real estate firms or farm houses,
trading in transferable development rights and investment in
capital market, including margin trading and
derivatives.
Loan
Limits
Bank loans towards commercial property can be availed, with
funding upto 60% of the value of the property.
With effect from 31st January, 2007, the RBI restricted the
maximum loan permitted to NRIs against their own deposits held
under Non Resident (External) RupeeNRE Accounts and Foreign
Currency Non Resident deposits FCNR (B) Accounts to Rs. 20
lakh.
Loan Tenure
The loan tenure may range from 1-15 years, though some
institutions would insist on wrapping up the loan in 4 -5
years.
Supporting
Documents
Documents required for purchasing a house are different from
documents required for acquiring a commercial space. The
following need to be submitted:
- Photo
identity,
- Residence
proof
- Bank
statements for the last six months
- Certified
copies of balance sheets,
- Profit
and loss statement of accounts,
- IT
acknowledgement,
- Advance
tax challans for both company and personal accounts for the
last three years, partnership deeds
- Brief
profile.
Loan
Disbursal
The sanctioned loan is disbursed only after
- Identification
and selection of the property.
- Submission
of the legal documents.
- Legal
and technical clearance of the property
- Investment
of personal contribution towards the property
Conditions to the
Loan
The loan shall not be utilised either singly or in association
with other person, for any of the activities in which
investment by NRIs is prohibited, namely;
- The
business of chit fund,
- Nidhi
Company,
- Agricultural
or plantation activities or in
- Real
estate business (excluding development of townships,
construction of residential/ commercial premises, reads or
bridges),
- Construction
of farm houses;
- Trading
in Transferable Development Rights (TDRs).
Repayment of
Loan
Repayment of loan shall be made from
- Out
of remittances from outside India through normal banking
channels,
- By
debit to the NRO/NRE/FCNR account of the borrower or,
- Out
of the sale proceeds of shares or securities or,
- Immovable
property against which such loan was
granted.
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