Home loans for NRIs: who can lend, repaying from NRE or NRO, and the power of attorney

Rules and rates as of 14 October 2026.

Many NRIs pay for a flat in India partly with a home loan from an Indian bank or housing finance company. The loan sits at the meeting point of two sets of rules: the foreign-exchange rules on who may lend rupees to a non-resident, and ordinary lending rules on how much and for how long. Add the practical problem of signing papers from abroad, and you get the three questions this explainer answers: can you borrow, how can you repay, and who signs for you in India.

Who may lend to you

The governing text is the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 (Notification No. FEMA 3(R)/2018-RB, 17 December 2018; the RBI's copy is amended up to 16 February 2026). Two provisions matter:

• Banks. Regulation 7(A)(i) lets an authorised dealer bank lend to an NRI or OCI cardholder under its board-approved loan policy, in line with RBI prudential guidelines. "Acquisition of a residential accommodation in India" is one of the listed purposes.
• Other lenders. Regulation 7(B)(i) lets a registered NBFC or housing finance institution give housing or vehicle loans to an NRI or OCI cardholder, on terms the RBI sets.

In both cases the borrowed money must not go to a "restricted end use". Regulation 3A lists these, including real estate business and, subject to conditions, construction of farmhouses. The definition of real estate business in regulation 2 excludes residential property for the borrower's own use, so buying a home to live in or keep is not caught.

The conditions the RBI attaches

The RBI's Master Direction on borrowing and lending in rupees between residents and NRIs/PIOs (FED Master Direction No. 6/2015-16, updated 8 September 2026) has a section on housing loans by banks and housing finance institutions. Its conditions:

• Loan amount, margin money and repayment period must be at par with what applies to a resident borrower.
• The loan must not be credited to your NRE, FCNR(B) or NRNR account. It goes towards the purchase, not into your savings.
• The loan must be fully secured by an equitable mortgage of the property being bought, with a lien on other Indian assets if needed.
• The interest rate must follow any RBI or National Housing Bank directives.

A point the editor and readers should note. The two documents do not line up neatly. The 2018 Regulations speak of NRIs and OCI cardholders and leave terms to the bank's board-approved policy. The Master Direction still cites the older Borrowing and Lending in Rupees Regulations, 2000, refers to NRIs and PIOs rather than OCIs, and does not mention the 2018 Regulations. Both are on the RBI site in current form. Your lender will say which conditions it applies; ask for them in writing.

How you can repay

Paragraph 4 of the Master Direction lists the sources for EMIs, interest and charges:

• remittances from outside India through banking channels;
• a debit to your NRE, FCNR(B), NRNR, NRO or NRSR account;
• rent from the property bought with the loan;
• a relative in India crediting your loan account directly, account to account.

The source matters when you sell. Paragraph 8.2 of the RBI's Master Direction on immovable property says EMIs on such a housing loan repaid from inward remittances or from NRE or FCNR(B) accounts "may be treated as equivalent to foreign exchange received". That helps the case for sending the sale proceeds abroad later, subject to the limit of two residential properties. EMIs paid from NRO, from rent or by a relative are not mentioned in that paragraph.

Worked example: EMI on a ₹60 lakh loan over 15 years

Illustrative only. The rates below are not any lender's offer. Lenders set NRI rates under their own policy; use the rate on your own sanction letter.

EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan, r the monthly rate (annual rate ÷ 12) and n the number of months.

At 8.75% a year: P = ₹60,00,000; r = 8.75 ÷ 1,200 = 0.00729167; n = 180.
(1 + r)¹⁸⁰ = 3.6978
EMI = ₹60,00,000 × 0.00729167 × 3.6978 ÷ 2.6978 = ₹59,967 a month.
Total paid = ₹59,966.92 (unrounded EMI) × 180 = ₹1,07,94,045, of which interest is about ₹47,94,045.

In the first month, interest is ₹60,00,000 × 0.00729167 = ₹43,750, so only about ₹16,217 of the EMI reduces the loan.

Illustrative rate	Monthly EMI	Total interest over 15 years	Total repaid
8.25%	₹58,208	₹44,77,516	₹1,04,77,516
8.75%	₹59,967	₹47,94,045	₹1,07,94,045
9.25%	₹61,752	₹51,15,277	₹1,11,15,277

Each half-point adds about ₹1,750 to ₹1,800 a month and roughly ₹3.2 lakh in interest over the term. If you pay the EMI from an NRE account, it is ₹59,967 of rupees each month; the amount in your home currency moves with the exchange rate, which this calculation does not model.

The power of attorney

Lenders and sub-registrars usually need someone to sign documents, appear for registration and collect papers in India. NRIs often give a relative a power of attorney for this. Three official points are worth knowing:

• Signing abroad. Indian missions attest powers of attorney. The Embassy of India in Oslo, for example, says you must sign in person at the counter, by appointment, with your original passport and photographs of both you and the attorney; it does not accept the document on stamp paper, and every page must be numbered and signed. Requirements differ by mission, so check yours.
• Stamping in India. A document signed abroad is stamped after it arrives. The Telangana Registration and Stamps Department FAQ says stamp duty can be paid within three months from the date the document is received in India, and the District Registrar endorses the payment under section 18 of the Indian Stamp Act, 1899. Stamp law is state-specific, so the rate and procedure depend on where the property is.
• Scope. Keep it specific: name the property, the lender and the acts allowed (signing loan papers, registration). A broad general power is harder to control from abroad.

A lawyer in the state where the property is can draft the power of attorney to suit both the lender and the sub-registrar.