NRI home loan and FEMA rules: buying a new flat in Bangalore from abroad

1.8.1 Can an NRI buy a new flat in Bangalore?

Yes. An NRI or an OCI can buy a new flat in Bangalore from a builder without approval from the Reserve Bank of India (RBI). Rule 24(a) of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 sets this rule. It lets an NRI or an OCI acquire immovable property in India “other than an agricultural land or farm house or plantation property”. RBI’s Master Direction on immovable property under FEMA repeats the rule in paragraph 3.1.1 of Part II. Paragraph 2.1 defines an NRI as a person resident outside India who is a citizen of India. Paragraph 2.2 defines an OCI as a person resident outside India who holds an Overseas Citizen of India card. A flat is not agricultural land, so the bar does not apply to it. In a plotted development, check that the land is converted to non-agricultural use. Bank of Baroda’s loan checklist lists a Non-Agriculture (NA) Certificate among the property documents. Rule 24 does not limit the number of flats you can buy.

Use these steps to buy a new flat as an NRI:

1. Check that you are an NRI or an OCI under FEMA, and that the property is not agricultural land, a farm house or plantation property.
2. Pay the booking amount from an inward remittance or a non-resident account. Do not use cash in foreign currency.
3. If you need a loan, apply to a bank or a housing finance institution that can lend to NRIs.
4. Sign the agreement for sale yourself, or give a power of attorney that is authenticated as section 33 of the Registration Act requires.
5. Deduct TDS on each payment if the price crosses ₹50 lakh.
6. Keep every remittance record and bank certificate, in case you sell and send the money abroad later.

Buyer	Can buy a new flat?	Rule
NRI (Indian citizen living abroad)	Yes, except agricultural land, farm house or plantation property	NDI Rules, rule 24(a)
OCI cardholder	Yes, same limits	NDI Rules, rule 24(a)
Spouse living abroad who is not an NRI or OCI	One property, jointly with the spouse, if the marriage is registered and has lasted at least two years	NDI Rules, rule 25
Citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau, Hong Kong or North Korea	Only with RBI’s prior permission, unless an OCI	Master Direction, Part II, paragraphs 9.1 and 9.2

1.8.2 How must an NRI pay the builder for a new flat?

An NRI must pay the builder through banking channels in India, from money sent from abroad or from a non-resident account. Rule 24(a) of the NDI Rules, 2019 allows two sources. The first is funds received in India through banking channels by way of inward remittance from any place outside India. The second is funds held in any non-resident account kept under FEMA. RBI’s FAQ and paragraph 3.3 of its Master Direction name the accounts as NRE, FCNR(B) and NRO. The rule also bars some modes. No payment can be made by traveller’s cheque, by foreign currency notes or by any mode that the rule does not permit. Paragraph 10.6 of Part II of the Master Direction says that every such transaction must go through banking channels in India. The source matters later. Money from abroad, NRE or FCNR(B) counts for repatriation of sale proceeds, while NRO money does not. So decide the source before you pay the booking amount.

Source of payment	Allowed for the purchase?	Counts for repatriation of sale money later?
Inward remittance from abroad through a bank	Yes	Yes (rule 29(2)(b))
NRE account	Yes	Yes (rule 29(2)(b))
FCNR(B) account	Yes	Yes (rule 29(2)(b))
NRO account	Yes (any non-resident account under FEMA)	No, rule 29(2)(b) does not list it
Home loan repaid from abroad, NRE or FCNR(B)	Yes	Yes, the Master Direction treats these repayments as foreign exchange (paragraph 8.2)
Traveller’s cheque or foreign currency notes	No	Not applicable

TDS also applies to you as a buyer. Section 393(1) of the Income-tax Act, 2025 covers a payment to a resident. Its Table, serial 3(i), applies to any person who pays for immovable property, other than agricultural land. The rate is 1 percent of the price or the stamp duty value, whichever is higher. The threshold is ₹50 lakh. The TDS on property purchase guide explains the form and the steps. If the seller is a non-resident, as in some resale deals, section 393(2) applies instead. This guide does not cover it.

1.8.3 How does an NRI home loan work for a new flat?

An NRI home loan works like a resident home loan, with rules on where the money goes and how you repay. Paragraph 4 of RBI’s Master Direction on rupee borrowing and lending with NRIs and PIOs sets the terms. Two kinds of lender may give an NRI or a PIO a loan for a home in India. One is an authorised dealer bank. The other is a housing finance institution approved by the National Housing Bank. The loan amount, margin money and repayment period must be at par with loans to residents. The loan cannot be credited to your NRE, FCNR(B) or NRNR account. The loan must be fully secured by an equitable mortgage of the flat, and if needed, a lien on your other assets in India. You can repay from remittances from abroad, from NRE, FCNR(B), NRNR, NRO or NRSR funds, or from the flat’s rent. A relative in India can also repay by an account-to-account transfer. The rate must follow RBI or National Housing Bank directions, if any.

Not every lender can make this loan. Paragraph 109 of the RBI Credit Facilities Directions, 2025 covers this. It says that RBI has not authorised all housing finance intermediaries to lend to NRIs. Ask a housing finance company to confirm its authorisation in writing. For a flat under construction, the bank still releases the loan in stages linked to construction, under paragraph 116. The home loan eligibility guide explains how lenders size a loan.

Bank of Baroda’s home loan checklist has a separate section for NRI, PIO and OCI applicants. The main items are below. Other lenders can ask for different papers, so get your lender’s list.

Bank of Baroda checklist, section B	Salaried applicant	Self-employed applicant
Identity and residence	Passport with visa stamp, proof of residence in India and abroad	Same
Contact in India	Name, relation, address and phone numbers of a local contact person	Same
Bank statements	NRE savings account and overseas bank account, last 6 months each	Same
Income	Employment contract, salary slips for 6 months, tax returns for 2 years (India or overseas)	Balance sheets and profit and loss accounts, tax returns for 3 years
Work proof	Employer ID card, latest work permit, Continuous Discharge Certificate if applicable	Business proof (any two registrations), Continuous Discharge Certificate if applicable

The checklist also asks for statements of all existing loans for the last year. It asks for an overseas credit bureau report, if you already have one.

1.8.4 How can an NRI use a power of attorney to buy and register the flat?

An NRI can appoint an agent in India by a power of attorney, so the agent can present documents for registration. Section 32(c) of the Registration Act, 1908 lets an agent present a document if a power of attorney authorises the agent. That power of attorney must be executed and authenticated in the manner that section 33 sets. Section 33(1)(c) covers a principal who does not reside in India. The power of attorney must be executed before, and authenticated by, a listed person. The list is a Notary Public, a Court, a Judge, a Magistrate, an Indian Consul or Vice-Consul, or a Central Government representative. So sign it abroad before one of them, and send the original to your agent. Karnataka also charges stamp duty on a power of attorney, under Article 41 of the Karnataka Stamp Act, 1957. Sachi did not verify the current duty for this guide. Ask the sub-registrar’s office, or a lawyer in Bangalore, before your agent uses the document.

Karnataka changed section 33 for the state in 2025. The Registration (Karnataka Amendment) Act, 2025 was published in the Karnataka Gazette on 28 July 2025. Section 3 of that Act changes section 33(4), so that a power of attorney “shall be proved” by its production. It also adds a proviso: proof that the person who executed the power of attorney is alive must be produced, as the rules specify. Section 2 makes registration compulsory for a power of attorney that authorises transfer of immovable property. That matters more when you later sell through an agent. Section 1(2) says the Act comes into force on a date that the State Government notifies. A legal update service, TeamLease RegTech, reports a start date of 13 August 2025. Sachi did not see that notification. Ask the sub-registrar which rules apply on the day your agent registers.

Item	What the law says	Source
Who can present a document	You, or your agent under a power of attorney	Registration Act, section 32
Authentication if you live abroad	Notary Public, Court, Judge, Magistrate, Indian Consul or Vice-Consul, or a Central Government representative	Registration Act, section 33(1)(c)
Proof that you are alive	Must be produced, as the rules specify	Registration (Karnataka Amendment) Act, 2025, section 3
Power of attorney to transfer property	Registration becomes compulsory	Registration (Karnataka Amendment) Act, 2025, section 2
Checks at registration	The Government advised states to check FEMA eligibility, travel documents and visa before registering	Master Direction, Annex (press release, 1 February 2009)

Read the sale deed registration guide for the registration steps. Give your agent a power of attorney that names the flat, the builder and the acts the agent may do. A broad power of attorney gives the agent more power than the purchase needs.

1.8.5 Can an NRI send the money abroad after selling the flat?

Yes, within limits. Rule 29(2) of the NDI Rules, 2019 covers a sale by an NRI or an OCI. An authorised dealer bank may then allow repatriation of the sale proceeds. Three conditions apply. First, you bought the property under the foreign exchange law in force at the time, or under these rules. Second, you paid for it in foreign exchange received through banking channels, or from an FCNR or NRE account. Third, for residential property, repatriation is “restricted to not more than two such properties”. Paragraph 8.2 of the Master Direction adds a rule for loans. If you repaid a housing loan from remittances from abroad, or from your NRE or FCNR(B) account, those repayments count as foreign exchange received. Repayments from NRO funds or rent do not meet that test. So the account you pay and repay from today decides how much you can send abroad later.

Condition for repatriation	Rule
Property bought under the foreign exchange law in force at the time	NDI Rules, rule 29(2)(a)
Paid from foreign exchange through banking channels, or FCNR or NRE funds	NDI Rules, rule 29(2)(b)
Residential property: not more than two properties	NDI Rules, rule 29(2)(c)
Loan repaid from abroad, NRE or FCNR(B) counts as foreign exchange	Master Direction, Part II, paragraph 8.2

RBI’s FAQ, Q.7(b), mentions a separate facility of up to USD 1 million per financial year under the FEM (Remittance of Assets) Regulations, 2016. It names some groups of NRIs, PIOs and foreign citizens, such as those who inherited property. Sachi did not read those regulations for this guide. If part of your money does not meet rule 29(2), ask your bank whether that facility applies to you.

Sachi reads K-RERA data for new projects in Bangalore. To shortlist a project from abroad and check its registration, Ask Sachi.