Suppose you are a Non-Resident Indian (NRI) or on your way to becoming one. In that case, a common fear is that you may not be eligible for financial services in India if you face a situation where you require urgent funding. That’s not entirely true. If you need money to take care of your urgent and immediate needs in another country, a personal loan window is open to you. If you fulfill specific eligibility criteria and have a good credit history and an ongoing relationship with a particular bank, getting that loan from a different country will not be difficult. Let’s understand what a personal loan is, the types of available personal loans for NRIs, its benefits, and ways to apply for the loan.
What Is A Personal Loan?
A personal loan is an unsecured credit that you can borrow from a bank or any other financial institution to meet your immediate financial need that may range from home renovation, travel to expanding your business, or medical emergencies. The documentation required is minimal, and approvals are fast and hassle-free. Besides, personal loans do not seek collateral or security. Interest rates on personal loans vary from bank to bank, but factors like credit history, loan tenure, income, occupation, etc., will help get a better interest rate.
What is An NRI Personal Loan?
Work, business, education, better opportunities, and family commitments could be a reason people move out of the country to start a new life. If you have newly moved to another country or are put up there for a short duration and need urgent financial aid, it will be difficult and tedious to procure loans from banks there. This is where NRI loans can come to your rescue. An NRI personal loan can be available from various banks in India to fulfill your personal needs in another country – travel, renovation, medical, etc. Many top lenders offer hassle-free loans to NRIs once the eligibility criteria have been met. While personal loans for Indian citizens are unsecured, personal loans can be both secured and unsecured for NRIs.
Features of NRI Personal Loans
An NRI borrower can avail personal loan amount of up to Rs 10 to Rs 30 lakh from Indian banks. This amount can vary depending on the lender.
Interest rate of personal loans arInterest rate of personal loanse usually higher than other loans, and NRI interest rates are pretty competitive. But if you have a good profile, credit history, and a clean banking relationship with the lender, they can negotiate the rate. Some banks give good deals and concessions on interest rates for NRI women borrowers.
Collateral or Security
Personal loans usually come without the hassle of pledging collateral or security. In the case of NRI personal loans, most lenders do not seek collaterals. Still, if not satisfied with the profile or credit history, specific lenders may want some amount of collateral pledged against the loan.
The repayment tenure is flexible as far as personal loans are concerned and largely depends on the borrower’s capacity based on their income and financial standing. Depending on the lender, it can range anywhere from one year to five years or sometimes even more.
Quick Application and Processing
Like regular personal loans, NRI personal loans are also relatively quick and easy to apply. The documentation required is minimum, and the application process is not time-consuming or complicated. Once the loan application has been made as per the conditions and information sought, the processing, sanctioning, and the disbursal happens quickly – sometimes within a few hours or a couple of days.
A personal loan online or offline is not restricted to a particular purpose. Still, the NRI borrower can use it for a variety of reasons that are personal, immediate, and short-term in nature, ranging from home renovation, travel to medical expenses.
Most lenders do not insist on the NRI applicant visiting the branch in person. Communication can be made over the phone and by email. Applicants can send a co-applicant residing in India for any clarifications or sign the documents.
The personal loan will be credited in the currency of your choice. It can be credited in the currency of the country you are living in or in Indian currency. You can mention your preference during the application process. This will be credited to your NRE/NRO (Non-Residential External/Non- Resident Ordinary) account.
Most banks prefer a person living and residing in India, usually a close relative of the borrower, as a co-applicant for an NRI personal loan.
Types of Personal Loans for NRIs
Personal loans for NRI can be divided into two types, largely on the basis of providing security or collateral. While not all banks insist on collateral for NRI personal loans, some do.
Secured Personal Loans
These are loans given to NRIs loans against collateral or security. Some of the collaterals accepted by private and public sector banks range from fixed deposits including NRE, NRO term deposits and FCNR deposits, high valued assets, shares, other securities, or any property or house owned by the applicant. Generally, in India, secured banks give personal loans if a family member or a close relative of the applicant acts as guarantor or co-applicant for the loan.
Unsecured Personal Loans
Here, the banks do not seek any collateral or security from the applicant. Collateral is not sought if the bank is convinced of the applicant’s ability to repay the loan. This decision will be taken after analyzing the borrower’s job status, income, profile, credit score, outstanding debt, etc. There is an amount of risk involved in an unsecured personal loan involving an NRI, and the loans are offered at higher interest rates.
NRI Personal Loans Offered By Top Lenders in India
|Bank||ICICI Bank||South Indian Bank||HDFC Bank||Kotak Mahindra Bank|
|Interest Rate||Starting from 15.49%||Starting from 10.20% p.a.||Starting from 14.75%p.a.||Varies with the loan amount|
|Tenure||Up to 36 months||12 to 60 months||12 to 60 months||Up to 10 years|
|Loan amount||Up to Rs. 10 lakh||Up to Rs. 10 lakh||Up to 40 lakh||Up to 80% of the cost of home improvement|
|Processing Fee||Up to 2.25% of loan amount plus GST||2% of the loan amount||Up to 2.50% of the loan amount||As per loan agreement|
- NRI personal loans are provided to both salaried and self-employed individuals living abroad.
- The age of the applicant can be anywhere between 21 and 60 at the time of application. However, for self-employed individuals, the age can extend up to 68.
- If the applicant is an individual drawing salary from a company, they should be working in the same company for at least a year. This criterion could vary among banks. A letter from the workplace is necessary to prove the tenure. The lenders also require proof of income.
- A self-employed professional is required to provide business proof. Banks usually require the businesses to provide proof of functioning of the business for a minimum period of 3 years. However, if the personal loan is secured, it could waive the requirement off.
- A work experience of a minimum of 1 year in a particular organization or two years running the current business is usually preferred.
- The income eligibility usually varies between lenders and the country in which the NRI applicant is residing and employed in. The lenders will have specific income criteria outlined before providing a personal loan to the applicant.
- The presence of a co-applicant is mandatory before lenders sanction the loan to the NRI applicant. The co-applicant is usually a close relative or family member of the applicant residing in India, either earning or non-earning.
Several important documents are required to be submitted by the NRI applicant to avail of the personal loan. They include –
- Identity proof of both applicant and co-applicant (Aadhar card, PAN card, driving license, passport, etc.)
- Address proof of both applicant and co-applicant ((Aadhar card, PAN card, driving license, passport, etc.)
- Passport and visa copy of the applicant
- A valid income proof – This includes submitting bank account statements of Indian or international banks for the last six months and salary certificates from the organization where the applicant is employed. For self-employed, account statements and other documents validating steady income or investments have to be submitted.
- A valid employment proof – This usually includes a job contract, appointment letter, labour identity card (applicable for NRIs employed in the Middle East), email from HR, etc. If self-employed, you need to provide other documents claiming the presence of business in the country.
- Passport size photographs
- The NRI applicant should submit an attested or notarized Power of Attorney if they are in the country when submitting the loan application. However, suppose the applicant is residing outside the country during the time of application. In that case, the Power of Attorney can be attested by the Indian Consulate of the country where the applicant is residing in.
The list of documents varies from lender to lender, and depending on the profile, employment status, and credit history of the applicant, they could seek more documents.
How to Apply Personal Loan for NRIs?
The “NRI Personal Loan Application Process” is hassle-free if you submit all the documents and meet the personal loan eligibility parameters. Applying from another country can be a bit cumbersome if documents are not in place.
Today, most banks have opened up NRI helpdesks to make the process easy, and it is easier to contact these helpdesks in advance and understand all the details before starting the application process. You can either call or email the branch or the helpdesk/customer care of the bank or visit the branch in person to apply for a personal loan.
However, the presence of the applicant in the branch is not mandatory. NRIs who are existing bank customers and have a good banking relationship with the lender is better positioned to get the loan quickly than other applicants. They can send their relatives or family members to the branch if required.
- Personal loans are immediate emergency funds. Because of the largely unsecured nature of this type of loan, the interest rates could be higher. It could be significantly higher for NRI applicants. So, it’s worthwhile to compare all the deals and offers of different lenders.
- Understand the official policy on the disbursement of the loan with the lender. The banks provide loans in Indian rupees or in the country’s currency where the applicant is residing. You can choose the currency at the time of application.
- Ensure that a relative living in India signs as the co-applicant for the loan. Most banks require a relative living in India to be a co-applicant. It won’t be easy to avail of the loan without a co-applicant. Understand the bank’s policy on this aspect.
- Inquire about the loan via phone or email, and send a relative to the branch to get an in-depth understanding of the fine print of the loan.
- Assess and evaluate the complete cost of the loan. There are various hidden charges. Some of the charges include processing fees, late payment fees, etc. Besides the interest rates, these charges must also be taken into account before opting for a particular NRI loan.
- Compare different interest rates and charges online of various lenders before you apply for an NRI personal loan. Additionally, if you own assets in India such as bank fixed deposits, property, or FCNR deposits, understand secured NRI personal loans as they come with lower rates of interest.
- Before applying for an NRI personal loan, have an idea about your credit score. It is essential to have a good credit score to get the loan approved quickly and avail of attractive interest rates.
- Evaluate your repayment capacity before applying for a personal loan from another country. Do not borrow simply because you are eligible. Inability to repay will get you in trouble as an NRI.
If you are an Indian living in another country and need some immediate cash, then do not hesitate to apply for instant personal loans in India. The process is easy if you have all the documents in order and can prove your repayment capacity. While there are both secured and unsecured personal loans for NRI available across banks in the country, with an excellent professional profile and an excellent credit score, you could get personal loans with attractive interest rates sanctioned within no time.
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