4 Investment options for NRIs

India Infoline News Service | Mumbai | February 08, 2016 17:14 IST

Many Indians have settled abroad over the years and countries such as the US, Canada, and the UK boast of having a highly vibrant Indian diaspora which contributes heavily toward their economic growth.

Many Indians have settled abroad over the years and countries such as the US, Canada, and the UK boast of having a highly vibrant Indian diaspora which contributes heavily toward their economic growth. India is fast emerging as an economic super power and this fact has not gone unnoticed among the NRIs. They have parked their dollars in India over the years. After the Indian economy was liberalized by the then P. V. Narasimha government in 1990s, foreign investment has seen a rapid rise in the country and it would not be wrong to assume that even NRIs have been an important cog of India’s growth story over the years.

One factor that lured them into investing in India is higher returns on conversion. The NRIs these days would be keener to invest in an emerging India, which is being ably led by PM Modi and is perceived by the world as a bright spot among EMs (Emerging Markets).

Given below are some investment options for NRIs.

  • NRE / NRO / FCNR Fixed Deposits

As an NRI, you can invest your money in a non-resident external (NRE) account and/or a non-resident ordinary (NRO) account. The money held in these accounts will be in rupees. You can access this as a normal savings account, a term deposit account, or a current account.

A foreign currency non-resident bank deposit (FCNR) is an account where you can deposit your money in foreign currency. Please note that these accounts are not affected by fluctuations in exchange rates and can be held jointly with an Indian resident. The interest on such accounts is not taxed. However, the principal amount is taxed as per the wealth tax regulations.

  • Direct Equity

If you seek higher returns on investment, invest in Indian stock markets. However, stock markets are highly sensitive and one must observe the headwinds and the overall outlook carefully before foraying into the share market. Some experts reckon that staying invested for a long term insulates you from immediate happenings. Everything essentially boils down to your risk profile though. If you have a higher appetite for risk, while the returns might seem attractive, there is always an element of risk. Therefore, study the current market situation carefully and consult experts before taking any decision in this regard.

  • Mutual Funds

Mutual funds usually safeguard your capital. However, check the asset management company’s rules carefully before investing. Most mutual funds provide NRIs with SIPs that allow you to break your total investment into monthly or quarterly installments. Invest in mutual funds on a repatriable or non-repatriable basis. If you want to invest on a repatriable basis, then have an NRE/FCNR account with a bank in India. In this case, the investment money should be remitted through usual banking channels or from the NRE and/or FCNR account of the NRI investor.

On the other hand, the investment made on a non-repatriation basis provides funds from NRO account or NRE/FCNR account of the investor.

  • Realty Investment
Real estate investment is always a center of attraction in developing countries. Real Estate Investment Trust (REIT) is more liquid compared with direct realty investment. NRIs can invest in commercial and residential properties without any approvals. Nonetheless, they cannot buy agricultural lands.

In the past few years, there is a huge increase in investment opportunities for NRIs. The Indian government has simplified investment rules for NRIs and is encouraging them to invest more in India. As every investment option might not be of interest to you because of returns or any other factor in your pecking order of priorities, select the option that best fits your requirements and maximizes your returns.


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