Are you an NRI investor looking to invest in share market in India? Knowing how to manage your investments can go a long way in planning your financial security and building wealth. NRIs have numerous opportunities to invest their earnings abroad into Indian assets for long-term appreciation. Some outstanding NRI investment options that you can explore include:
Equities: If you have a Demat and share trading account with a reputed stockbroker such as Kotak Securities you can be eligible to invest directly into the stock market under RBI’s Portfolio Investment Scheme (PIS). According to RBI regulations, NRIs must obtain approvals under the PIS to commence trading in the Indian stock market. Besides, only one PIS account can be provided per NRI.
However, you would need to open a Demat and a brokerage account with a SEBI-registered broking company. Also, you can only conduct trading transactions through a stockbroker, and not on your own. Hence if you are looking to trade in the Indian equity market, you must have an NRE or NRO bank account with an Indian bank, a trading account and a Demat account with an authorised broking company. Based on the list of stocks eligible for NRIs, you can trade in specific Indian stocks in the stock market. However, you may want to know that as an NRI, you will be unable to conduct intraday trading or short selling in India. This means your trading can only take place on delivery basis and that you would need to own specific stocks before selling them.
Fixed deposits: As a common and popular investment mode, NRIs can open fixed deposit accounts in an Indian bank that is authorised to deal in foreign exchange. Simply put, as an NRI, you can open a term deposit in three different ways. These include NRE account, NRO account and FCNR account with an Indian bank. You can benefit from attractive interest rates on fixed deposits as banks offer a slightly higher rate of interest for NRIs.
Real estate: A conventional and straightforward investment method for most NRI is to invest in the real estate sector. Owning property is a worthy asset that can lead to financial appreciation and provide you with a sense of emotional and financial security. Regarded as a lucrative investment option, the real estate sector can be a promising investment for NRIs. As an NRI, you can buy residential and commercial property. However, NRIs are not permitted to purchase plantations, farmhouses or agricultural lands.
Mutual funds: NRIs can invest in the Indian equity market through mutual funds that are professionally managed investments. A number of excellent equity mutual funds in India have yielded over 20% compounded annual returns in the past two decades, that have outperformed indices such as Nifty and the Sensex. As an NRI, you can generate excellent returns in mutual funds as compared to idle money in bank accounts. For instance, you can consider debt mutual funds as they offer better tax efficiency than bank fixed deposits and can provide you with 100 to 250 basis points extra returns in comparison to the bank fixed deposits.