Farm push salutary

RBI ANNUAL POLICY 2004-05/ MARKET MEASURES - THEIR TAKE

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T V Mohandas Pai
Director & CFO
Infosys Technologies

The Reserve Bank of India (RBI) yesterday allowed the close relatives of non-resident Indians (NRIs) or people of Indian origin (PIO) to pay instalments of home loans in rupees, for loans NRIs or PIOs had taken.

This is part of the foreign exchange liberalisation measures the RBI has adopted.

NRIs and PIO can avail of home loans in rupees from authorised dealers or housing finance institutions approved by the National Housing Bank (NHB).

These loans are repaid by the borrowers either by way of inward remittances through normal banking channels or by debiting their NRE/ FCNR(B) /NRO/ NRNR/ NRSR accounts. Alternatively, the loans can also be repaid from the rental incomes from the property.

Now the RBI has proposed allowing NRIs' close relatives in India to repay the loan instalments, interest and other charges directly to the housing finance companies.

"This will help a certain class of group of people as the average size of NRI home loans ranges between Rs 15-20 lakh and, given the shorter payment terms, the equated monthly installment (EMI) works out higher," said Housing Development Finance Corporation (HDFC) general manager operations, Mumbai region, Suresh Menon.

For instance, the EMI on a Rs 20-lakh home loan to NRIs for a five-year period would amount to about Rs 40,000, which may not be possible for most 'close relatives' to pay.

Meanwhile, the government had already relaxed and simplified guidelines on external commercial borrowings (ECBs).