Which Bank Is Best for an NRI Personal Loan in India?

Sometimes, while living overseas, NRIs face unforeseen financial expenses. For urgent financial needs, obtaining loans in that country can be extremely difficult. In this circumstance, with the help of professional loans available for NRIs, you can take care of your emergency expenses overseas.

Given this, several leading banks in India, like ICICI, offer personal loans to NRIs. They can use the loans for home renovations, large purchases, a dream wedding, or education. Want to know which bank is best for an NRI personal loan in India? This blog provides a closer look at the banks that offer personal loans to NRIs. So read on and gather all the information.

What Are NRI Personal Loans?

An NRI personal loan is an unsecured loan that can be used for any financial requirement. Unlike most other loans that are strictly used for specific purposes, these loans provide a lot of flexibility. Considering this, the borrower can use it for several purposes such as medical emergencies, home renovations, education, debt consolidation, and more.

NRIs can apply for a personal loan with or without security. Additionally, compared to other loans, this is a short-term loan for most lenders, with a maximum repayment term of five years. Following the loan disbursement, the borrower may choose to make monthly installments for repayment. Also, he/she repays the loan as a lump sum amount.

Further, over the years, applying for a personal loan for NRIs has also become straightforward. Depending on the lender's policies, NRIs can now complete the loan application process from overseas or from the comfort of their home.

So, this was all about NRI personal loans. Moving ahead, let's know the best banks offering personal loans to NRIs.

Best Banks Offering Personal Loans for NRIs

Here is the list of the best banks offering personal loans for NRIs in India:

ICICI Bank NRI Personal Loans

ICICI Bank offers a simplified and easy method for NRIs to get a personal loan. However, at the time of application, the bank does not need the NRI applicant to be in India, and the co-applicant, an Indian resident, is a close relative of an NRI. Additionally, during the time of loan application submission, NRIs need to provide a salary slip and an NRO/ NRE bank statement.

• NRIs can use the loan for home renovations, weddings, and other personal expenses.
• No collateral or security is required.
• The co-applicant should be a resident of India.

SBI NRI Personal Loans

State Bank of India provides NRIs a loan against a deposit for use in India. They can use it for buying a flat or house, for business purposes, or in an emergency. However, NRIs can only get a loan against an FCNR (B) account from an overseas SBI office, in a foreign currency.

• Loan can only be provided against an NRE, NRO, or FCNR (B) Deposit.
• No minimum amount of loan.
• Repayment can be made up to maturity.

HDFC Bank NRI Personal Loans

In HDFC Bank, NRIs can take a loan against their NRE, NRO, and FCNR (B) deposits in times of emergency or need. Additionally, if you are looking for a home loan in India to purchase a house, the bank offers a separate Home Loan for NRIs.

• Simplified online application.
• Borrow a maximum of 70-90% of the deposit amount.
• Until repayment, interest-only payment.

PNB NRI Personal Loans

PNB Banks provides NRIs with personal housing loans to buy, renovate, or repair a home or flat in India. The loan should be used for a home or flat that the account holder is putting up for rent. It should not be used for a real estate business.

• Loan available only for a house or flat.
• Can be held by a PIO.
• Repayment of the loan should be done through an NRE, NRO, or FCNR (B) account in India.

Axis Bank Personal Loans

Axis Bank provides loans to NRIs for purchasing a home or an investment property. The bank offers an easy-to-use application process. Additionally, the loan application gets approved in 5 days. However, to qualify for a bank loan, there is an income requirement of USD 3,000 per month and at least a tenure overseas of two years.

• Loans are provided for commercial real estate or a home.
• Income and stay abroad requirement.
• Unique investment option for NRI entrepreneurs.

South Indian Bank NRI Personal Loans

South Indian Bank, to NRIs, provides their regular resident personal loans. However, eligibility amounts differ for residents. Additionally, NRIs need to show 12 months of NRE account activity, and the account's co-applicant should be a resident Indian.

• It can be used for travel, education, medical, or asset purchases.
• Prepayment charges apply.
• No collateral or security is required.

Kotak Mahindra NRI Personal Loans

Kotak Mahindra to NRIs buying a home first time or NRIs looking to update their family home, providing them with an NRI home loan and an NRI home improvement loan. Both loan types are ideal for NRIs. Additionally, eligibility for the loan is based on the income requirements from abroad earnings.

• Offers two home-focused loans available.
• Insurance options available.
• A co-applicant, an Indian resident, is not required.

TATA Capital NRI Personal Loans

For Indian residents, Tata Capital is a go-to for loans; however, for NRIs, it offers only home loans. The benefit of getting a loan from Tata Capital is that it offers attractive interest rates, a customizable tenure, and flexible EMI options for NRIs.

• A loan is only available for the purchase of a home.
• Apply for the loan online.
• Attractive interest rates and a customizable tenure period.

These were the best banks offering personal loans to NRIs in India. Generally, ICICI Bank is stated as the top choice due to its high loan amounts and competitive rates for NRI personal loans. Moving further, let's look at the eligibility criteria NRIs need to meet to take a loan in India.

Eligibility Criteria for NRIs Taking a Loan in India

The eligibility for a personal loan for NRIs is as follows:

For Salaried Individuals

• Age: Minimum 21 years and maximum 60 years.
• Minimum Total Work Experience: 2 years with a minimum of a year in the current organization.
• Co-applicant is vital and should be a close relative of the applicant, such as a father, sibling, or more.
• Additionally, based on the NRI's monthly income, credit score, employer profile, ongoing EMIs, etc., lenders determine their personal loan eligibility.

For Self-Employed Individuals

• Age: Minimum 21 years and maximum 68 years.
• Minimum Total Work Experience: 2 years in the current business.
• Co-applicant is mandatory and should be a close relative of the applicant, such as a father, sibling, or more.

This was all about the eligibility criteria for NRIs taking a loan in India. Moving ahead, let's know the documents required for NRI personal loans. 

Documents Required for NRI Personal Loans

To avail a personal loan, generally, NRI applicants need to submit the following documents:

• With a passport-sized color photograph and a duly filled loan application form.
• A photocopy of the applicant's passport and visa.
• Identity proof (for both applicant and co-applicant): PAN card, Aadhaar card (optional)
• Address proof (for both applicant and co-applicant): Passport, Aadhaar card.
• Income proof: Bank account statements of the last six months of both Indian and international banks, salary slips for the last six months, or a salary certificate.
• Employment proof: Job contract, appointment letter, official email ID, HR email ID, identity/ labour card, CDC (for NRIs working in the merchant navy or in the Middle East).

These were the documents required for NRI personal loans. Additionally, depending on the banks' personal loan documentation policies, NRIs may need to submit additional documents. Moving on, let's see how NRIs can apply for a personal loan in India.

How NRIs Can Apply for a Personal Loan in India?

Here is how NRIs can apply for a personal loan in India:

Phase 1: Pre-Application Preparation

Select Your Bank Strategy

• Want unsecured loans
• Substantial deposits
• Home-related funding

Arrange Co-Applicant:

• Identify a close relative who wants to apply for a loan.
• Check their financial standing and credit score.
• Collect their complete documentation.
• Clearly discuss the repayment responsibilities.

Gathering Documents:

• Complete the Know Your Customer (KYC) documentation for both parties.
• Verification of overseas employment and income.
• Bank statements (both Indian and foreign accounts).
• Professional translations if documents are in the local language.

Phase 2: Submission of Application

• Visit the official site of the bank or contact the NRI desk.
• Fill out the pre-online application process.
• Submit the required documents online or by visiting the branch.
• Wait for the approval, generally it takes 5-7 working days.
• Complete the final verification (may require your visit to India).

Phase 3: Processing and Disbursal

General Timeline:

• Verification of document: 3-5 working days
• Credit assessment: 7-10 working days
• Final approval: 2-3 working days
• Disbursal: 1-2 working days after approval

Disbursal Methods:

• Direct credit to your NRE or NRO account.
• Transfer the account of the co-applicant in India.
• Demand draft for specific purposes.

This is how NRIs can apply for a personal loan in India. Moving ahead, let's look at the tax implications NRIs face when taking a personal loan in India.

Tax Implications for NRIs Taking Personal Loans in India

In India, personal loans are not taxable income. Considering this, whether you are a resident or an NRI, the loan amount you have borrowed will be treated as your liability. This means that, from your Indian bank, if you have taken a loan of INR 5,00,000 just because it arrived in your bank account, it will not be taxed. This amount won't be treated as your income by the Income Tax Department. It includes taking a loan for education, home renovation, and more.

Additionally, if you have taken a personal loan for business purposes, under section 36(1)(iii) of the Income Tax Act, you can claim interest paid on the loan as business expenses.

However, if you have taken a personal loan to purchase mutual funds or stocks, a tax deduction is available. Also, you are liable to pay tax on the capital gains you earn from these investments. Apart from this, the tax department may also ask you questions about using a personal loan for funding your investment. This is because taking a personal loan to buy investments is not allowed in India.

Here are a quick takeaways for NRIs:

• In India, personal loans are not taxed as income. It includes loans taken for education, purchasing a house, a wedding, or more.
• For personal consumption, no tax benefit is available.
• For home-related use, up to INR 2,00,000 tax deduction is possible.
• Business usage interest can be deducted.
• Investment usage doesn't qualify for a tax deduction, but capital gains on it are taxed.

So, this was all about the tax implications for NRIs taking a personal loan in India.

Final Thoughts

Lastly, the best bank for an NRI personal loan in India depends on your financial goals and personal preferences. It is because every bank has different benefits. Getting an NRI personal loan in India is a straightforward process. It includes minimal documentation. Additionally, the borrower can complete the application process online without leaving home.

Further, if you are confused and need guidance on NRI investment and banking strategies, connect with Savetaxs. We have a team of financial experts who can assist with your financial planning in India.