Investment Options

Why NRIs should invest in India?

Here are a few reasons why NRIs seek investment opportunities in India:

1. Economic stability
   • Over the years, India’s GDP has grown considerably. It now ranks amongst the top 5 economies in the world. Strong GDP signifies economic stability. As an NRI investor, it also signals great opportunities. If you invest wisely, you can expect to get decent returns.
2. Diversification
   • When you invest in India, you get a chance to diversify your financial investments. There are many investment plans for NRIs in India, and you can invest in multiple instruments as per your needs.
   • But before you start investing in India, you must acquaint yourself with the investment guidelines laid down by SEBI (Securities and Exchange Board of India) and RBI (Reserve Bank of India) under the FEMA (Foreign Exchange Management Act 1999). Now that you know as an NRI, you can invest in India, let us look at the different investment plans for NRIs.

Different investment options for NRIs in India

• Fixed deposits

  Fixed deposits (or FDs) are one of the safest investment options for NRIs in India, especially if you have a low risk-taking capacity. It provides steady and assured returns at a fixed rate. You can hold an FD account with any bank of your choice.you can open an NRE (non-resident external) FD, NRO (non-resident ordinary) FD or FCNR (foreign currency non-resident) FD account.

  • An NRE FD allows you to invest your overseas earnings in India and maintain the funds in Indian currency.
  • An NRO FD allows you to invest the income earned in India from sources like rent, pension or dividends, and earn decent returns over time.

An FCNR FD is one of the best NRI investments in India that allows you to maintain your investment in foreign currency.

Eligibility criteria for NRE fixed deposits

To open an NRE fixed deposits, one needs to fulfil the following criteria:

• • The individual needs to be a Non-Resident Indian (NRE) or a Person of Indian Origin (POI)
  • They need to have NRE accounts

Documents required to open NRE deposits

To open an NRE deposit, an individual needs to submit documents like:

• Passport
• Valid work visa
• Address proof

Features of NRE Deposits

• Money can be deposited in Indian rupees
• The account can be closed at any time after they are opened
• Offers flexible tenures that may range from 1 year to 10 years
• Auto-renewal facilities are offered by banks where the FD renews itself once it matures.
• Some banks may even allow loans against NRE deposits
• Some banks allow up to 90% overdrafts on NRE deposits
• Some banks also allow NRE deposits to be held jointly
• Banks may even offer tax-saver fixed deposits to NRIs allowing them to claim tax benefits under Section 80C of the IT Act
• Banks have stipulations about what the minimum and maximum amounts that one can deposit

Mutual funds

• Mutual Fund Managers manage your investments in the mutual fund scheme. There, they allocate your money in different instruments like debt, equity or money market instruments based on stated investment objective of the mutual fund scheme. You can choose any fund based on your risk appetite, returns expectations, and investment goals. Moreover, you can invest in mutual funds through a SIP (Systematic Investment Plan) or lump sum route

 Real estate

• NRIs can buy or own a property in India. The RBI permits NRIs to buy any commercial or residential property and make real estate investments. However, it’s important to understand that NRIs cannot buy any plantation property or agricultural land.

Insurance

Insurance aims to provide financial protection to an individual, one’s family and assets from unfortunate events or death. In addition, newer insurance policies have evolved to help you to build your wealth, plan for retirement, protect your house and personal belongings, reimburse medical expenses, hospitals bills, etc.

• Life insurance: Life insurance policies provide financial protection against loss of life.
• General insurance: General insurance products provide financial protection against non-life-threatening events such as medical exigencies and accidents, and for homes, travel, automobiles, etc.
• Unit Linked Insurance Plans (ULIPs): This smart plan is an individual linked life insurance and savings plan that helps you generate wealth by investing in a mix of debt and equity along with providing life cover. However, since it’s a market-linked investment, this instrument carries a certain degree of risk and therefore, it’s important to note that you should invest according to your risk tolerance.

Public Provident Fund (PPF)

• This is a government initiative where one can buy the plan from a Pension Fund regulatory and developmental authority-recognized organization. A PPF helps build a retirement fund through the regular payments that you will make. Every year, you can invest a minimum of ₹500 to a maximum of ₹1,50,000 for the tenure of the fund, which is 15 years.
• NRIs must inform their bank/post office of their change in residential status within one month to ensure compliance and allow continued contributions until account maturity.NRIs can continue investing in existing Public Provident Fund (PPF) accounts opened while they were Indian residents, but they cannot open new ones. They can contribute until the maturity of the account, but funds are on a non-repatriable basis. The account needs to be closed on maturity.

National Pension Scheme (NPS)

• This is a government-based plan (in Tier 1) with tax benefits. Withdrawal is allowed only after ten years of investing, which is the maturity period. Such an after-retirement plan allows only 40% of withdrawal; the rest is regular income. Tier 2, on the other hand, offers more flexibility in withdrawing money and is not exempt from tax.