Monday, January 2, 2017

Can NRI take Personal Loans in India? Which is the best bank to take NRI Person loan?

Yes, NRIs can take personal loans in India, nothing stops them except the bank which are giving Personal loans. Unfortunately, even though, all the public sector banks e.g. SBI, Bank of Baroda, Punjab national bank, private sector e.g. ICICI, HDFC, Axis bank, YESBank, Standard chartered, Federal bank, and even non-banking financial institution like Tata Capital, LIC finance are offering home loans to NRI but no one is providing personal loans to NRIs.


I checked the website of all popular banks e.g. ICICI bank, State bank of India, HDFC bank, Axis bank, YESBank they are not providing personal loans to NRIs. Some of them ar also providing loans FCNR (B) Deposits in Rupees and loan against FCNR (B) Deposits in Foreign Currency in India, but no personal loans. For example, HDFC bank allows an overdraft against your NRE / NRO / FCNR while still retaining ownership.

In short, even though most of the Indian banks are providing NRIs home loans, educational loans, and loan against deposit there is no NRI personal loan in HDFC, SBI, Axis bank, ICICI, IDBCI and Federal bank. Either, you need to give guarantor or make someone of your family which is in India a co-applicant or put some collateral deposit as security.


The only bank which I found providing personal loans to NRI is the South Indian Bank or SIC https://www.southindianbank.com/content/viewContent.aspx?linkIdLvl2=49&linkId=140, which provides personal loans for meeting personal and family finance requirements including expenses towards the purchase of household articles, electronics items, computers equipment, medical expenses, foreign trips or traveling abroad on an employment contract.

As per their website, You can maximum loan of 50% of the average annual remittance your NRI account or your spouse’s domestic account (excluding bulk remittance) subject to a maximum limit of Rs. 10.00 lacs. The maximum repayment period is 48 months and processing fee is 0.50% of the loan amount upfront. You might require submitting some security e.g. a guarantor or a property as collateral security, especially if you are taking a loan and going abroad for employment. The loan amount will only be disbursed to NRO account, hence you must have an NRO account before you apply for NRO personal loan with South Indian Bank.

The south Indian bank is based in Kerala and has the head office in Thrissur and you can refer to their website for more details on the personal loan for NRIs in Kerala.



NRI Personal Loan Eligibility

The eligibility requirement is more or less same for any personal loan e.g.
  1. The applicant should be an Indian citizen
  2. The age of applicant should be minimum 21 years
  3. The applicant should be a salaried professional or a self-employed individual
  4. The income of applicant should match up to the mark of the city you are residing and the amount of loan you are applying for
  5. The applicant need to submit salary slips, bank statements, employment proof, ID proof, address proof, and age proof, etc
There may be some additional eligibility criterion based upon individuals and the bank you are applying for a personal loan, so better to check with the bank website once you zero in the bank for taking a personal loan.


Can NRI take Personal Loans in India? Which is the best bank to take NRI Person loan?


Documents required for NRI personal loan 

The documentation for NRI personal loan is similar to any regular personal loan e.g. you need to submit your KYC details and your income details. For NRIs, you also need to submit documents to confirm your NRI residential status e.g. passport and VISA of your country of living.

In short, here are documents required for applying for NRI personal loans
  1. Photocopy of passport and VISA of the applicant.
  2. Salary certificate in English, specifying the name, date of joining, designation and salary details.
  3. Both domestic (NRE/NRO/FCNR) and international bank statements for the last six months.
  4. If the applicant is not available in India when the application form is submitted, then a General Power of Attorney duly attested by the Indian consulate in the NRI's resident country needs to be submitted. If the applicant is present in India then the Power of Attorney can be locally notarized.
  5. A copy of NRI's appointment letter as well as contract.
  6. If the applicant is employed in the Middle East, then they need to submit a copy of their labor card/identity card that is translated in English and countersigned by the respective consulate.
  7. If the applicant is employed in the merchant navy, then they need to submit a copy of their CDC as well as their contract slip with Income details.

You may be required to submit some additional documents, so best to check with the bank which you are applying for personal loan.



Should NRI take personal loans overseas?

I think it's a good option because they can get the same personal loan with lower interest rate. For example, if you are living in Singapore, you can get a two-year personal loan up to 4 times of your salary for less than 5%. Many leading bank in Singapore e.g. Citibank, HSBC are providing cheap personal loan for NRIs living in Singapore. Of course, you have to meet their eligibility criterion in terms of minimum salary, age, and other factors.

If you are living and working in the United States of America, you can get cheap personal loans from local banks e.g. Citibank, Bank Of America, WellsFargo, HSBC, and others.

The documentation will be standard e.g. you need to submit your personal details, salary details etc. You can even use websites like gobean.com to compare personal loans before committing to one. It's always good to compare interest rate, maximum loan amount, repayment period, processing fee and foreclosure charges before selecting any bank for a personal loan given so many banks are willing to give you loan these days.

In Singapore itself, you 12 to 13 banks including both local e.g. DBS, OCBC, UOB and internal banks like Citi, Standard Charted, HSBC providing personal loans.

In India, also you can use tools like https://www.bankbazaar.com/ to compare important details of different loan providers.

In short, no personal loan for NRI from SBI, Federal bank, ICICI bank or HDFC. Most of the bank which boasts personal loans for NRIs actually give loan against the NRE, NRO, and FCNR fixed deposits e.g. the overdraft facility provided by HDFC. Some of the bank e.g. South Indian bank does give the personal loan to NRIs but they require some guarantor and collateral deposit.

I think the best option for NRIs which are looking for the personal loan is to take the personal loan in overseas i.e. in the country they are currently working. They will not just get the benefit of lower interest rate e.g. in Singapore, US, UK, Australia personal loans are cheaper than India but also it will less hassle free to them. Once they get the money they can remit to India for any personal purpose.

2 comments:

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  2. HDFC Home Loan for NRI, PIO's and OCI's for purchase of residential property in India. Avail property search and home loan advisory services from HDFC.

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