For investors, the Indian economy has shown encouraging development in recent years. The international investors found India a desirable choice to make investments in. Moreover, the government of India also has granted several relaxations in the provisions of NRI investment, and as a result, the Non Residents of India can now have numerous options to add on to their wealth by investing in India. IndusInd Bank
However, there are certain perquisites that NRIs need to fulfill before they start investing in India. An individual must be an NRI account holder to not only be able to invest in India but also to carry transactions in the country. The individual will also be subjected to interest rates on NRE fixed deposits. However, the interest rates on NRE fixed deposits vary from one bank to another.
Here are the top 5 investment choices for NRIs to lodge their assets and earn a return on their investments. It is also important to ascertain your financial situation and determine the risks associated:
Mutual Funds
A Non-Resident Indian can invest in the Indian Stock Market. However, to do so, he must first open a Portfolio Investment Scheme, which is popularly known as PIS Account. A PIS account can also be linked to a Demat account which can be opened with any registered stockbroker in India. Long-term returns in the Indian stock market are high, but not without volatility. Equity investments offer the potential to outperform inflation and enhance the wealth of an NRI. One should always well-informed decisions as the risk associated with investing in the stock market is higher as compared to FDs and PPF. NRIs can also open a trading account, but they cannot trade the stocks. They can only sell the stocks that have already been delivered to them.
Fixed Deposit
Fixed Deposits (FDs) are an all-time safe investment choice that is equally popular among Indian citizens as well as NRIs. NRIs can invest in fixed deposits with a bank or any non-banking financial institution of their choice. As already discussed, to invest in an FD, an NRI must open an FCNR (Account for depositing foreign currency earned in India), and an NRE account in their name.
Real Estate
NRIs can invest in both residential and commercial real estate. They can loan the amount in India to purchase the property. However, NRIs cannot invest in farms, agricultural property, or plantations. If you make your decisions wisely and invest in reputed properties, it can give you a high amount of returns in the future. The best part of investing in real estate properties is that they are not much affected by market fluctuations and is thus very popular as an investment option not only to the NRIs but Indian citizens as well. However, since NRIs would not be able to keep a check on the property they have made an investment in; they must hire someone to take care of it.
Public Provident Fund
The Public Provident Fund (PPF) is another secure investment option for NRIs in India. This scheme is authorized by the Government of India and offers a reasonable interest rate, the current interest rate being 7.1% per year. It is an amazing alternative if one wants to lock in your investment for a certain amount of time. The scheme comes in with a lock-in period of up to 15 years. The IT Act also exempts investments from any kind of taxation. The limitation here is that you can only invest up to INR 1, 50,000 in any given year. As a result, people looking to make large investments may find the cap below.
Government Securities
The Indian government has now made it possible for non-resident Indians to invest in government securities and T-bills on a repatriable or non-repatriable basis. The most significant advantage of investing in government securities is that it is risk-free. Secure transactions ensure that the returns are safe and risk-free. An NRI can also diversify his or her financial portfolio by investing in government securities. Having such investments in one’s portfolio decreases the total risk factor of the portfolio significantly.
Bonds
NRIs can also invest in various bonds, be it PSU binds or perpetual bonds only if the issuer allows it. The government has also started providing tax-free bonds to NRIs in the past few years.
These were some of the best investment options for NRIs. However, they must make a calculative decision depending on the market scenario to get the desired returns on their investments.