NRIs (of Indian nationality or foreign citizens of Indian Origin) can avail loans for the purpose of acquiring flats / house in India for their own residential use against their NRE deposit in India.
The other salient features of this facility are listed below:-
  1. Tenure: - The period of loan can not exceed the period of the NRE deposit/s pledged as securities. The loan as well as the deposits can be renewed at the request of the borrower and the depositor subject to prevailing RBI directives for interest rate/s. RBI directives, as applicable from time to time, with reference to margin, interest rates.

  2. Re payment: -These loans can be repaid out of the remittance from abroad or by utilising the proceeds of the NRE deposits accepted as security for the funds held in FCNR / NRNR / NRE accounts of the borrower.

    Repayment out of local sources i.e funds held in NRO account of the NRI borrower also is permissible. However, commercial rate of interest will be charged in this case by the Bank/s.

  3. Use: - The house / Flats / Constructed / Acquired under this loan facility should be strictly for residential purpose and not for commercial purpose.

  4. Repatriation Prohibited: - The sale proceeds of the House / Flat can not be repatriated outside India.

Specific Provisions: - Foreign citizen of Indian origin has to obtain approval from RBI under section 31 of FERA 1973, for acquisition of property.

In case of a resident who had availed of loan / over draft facility while resident in India and who subsequently becomes Non Resident is now permitted to repay the liability not only out of funds held in NRE / NRO account but also from the borrower's FCNR and NRNR accounts.