India is one of the top-ranked countries considering the amount of international remittance. Moreover, 31 million NRIs and persons of Indian origins (POI) residing outside the country are recorded according to the Ministry of External Affairs report, 2018.
Nonetheless, NRIs are considering India as a viable option for investment witnessing the rising foreign investments. Hence, a noticeable number of NRI account opening is visible.
An NRI optimally needs to maintain different types of accounts to manage both Indian and foreign earnings. To ease out the confusions, here is the list –
Before proceeding to the options, an NRI must have the following accounts to invest in India.
- NRO or Non-Resident Ordinary Rupee Accounts are used to manage the income earned in India.
- NRE or Non-Resident RupeeExternal Accounts are used to handle foreign currency earned by the account holder. To clarify, it is denominated by INR.
- FCNR or Foreign Currency Non-Repatriable fixed deposit accounts are where the deposits can be made in foreign currencies.
- RFC or Resident Foreign Currency accounts can be maintained by both Indian residents and NRIs to restore their foreign currency from overseas banks.
For NRIs looking out to make their investment feasible, here are some options to go for –
- Mutual funds
Mutual funds are subject to market risks. Considering return and risk factors, they are midway between stock market investments and fixed deposits. To clarify, mutual funds are neither as secured as FDs nor as risky as stock markets. Also, they offer 8-15% annual returns, higher than on FDs.
NRIs can opt for different types of mutual funds such as debt, equity, and hybrid only after their NRI account opening – NRE or NRO accounts and also only in INR.
- Fixed deposit
Fixed deposits are one of the most common investment avenues for Indians. Taking safety into account, NRIs also can invest in FDs. Returns on FDs depend upon the corpus deposited and financial institutions. NBFCs like Bajaj Finance offers FDs with attractive interest rate up to 8.20%.
NRIs or any other FD investor can calculate their returns using the fixed deposit calculator. An online FD calculator is available on the website of relevant institutions. Similar to the investments in mutual funds, an NRI needs NRE, NRO or FCNR account to invest in an FD scheme.
Equity is the investment directly made into the stock market. NRIs with high risk-taking capability can invest in it. Annualised returns on equity investments vary from 12-15%. NRIs must have NRO, NRE or FCNR accounts, trading accounts, and a Demat account to start investing in stocks. Or they also are allowed to invest through the portfolio investment scheme of RBI.
SEBI regulates the money market in India. So, all market-related investment avenues come under its norms and regulations.
- National Pension Scheme
NRIs looking for safe and guaranteed returns can opt for the National Pension Scheme. This is a government-backed, cost-effective, and an easy avenue to invest in. A well-planned investment in NPS can come with an annual return of 12-14%. NRIs within the age bracket of 18-60 years can invest in it. It is considered as one of the best investment options in India.
NRIs can also enjoy tax exemptions of up to Rs.1.5 lakh on investing in the NPS. The maturity amount is absolutely tax-free. An NRI account opening is vital mandatory to invest in NPS. Also, NRIs who have a PAN card and a bank account can open the NPS account online.
- Real estate
As per Anarock Property Consultants’ Consumer Sentiment survey, more than 70% of NRIs consider real estate investment more than any other channel. Real estate prices in cities like Mumbai, Delhi, Bangalore, Pune, Hyderabad, Kolkata, etc. are rising continuously. NRIs can earn substantial returns by investing in real estate; they can also let it out on rent. NRI account opening is important for streamlined transactions.
- Public Provident Fund
Another government-endorsed investment option in India is the Public Provident Fund or PPF. It is a secured investment channel with about 8% annualised return.
PPF investment has 15 years of lock-in period and Rs.1.5 lakh is the maximum investment amount per annum. PPF also comes with tax benefits of up to Rs.1.5 lakh under Section 80C of the IT Act. Notably, NRIs cannot open new PPF accounts but can only invest in the scheme if they have existing PPF accounts.
To sum it up, NRIs can invest in multiple avenues in India as per their risk-appetite and capacity. A thorough financial and risk analysis is always advisable before investing.