While there are many NRI Investment Options in India, one should check his requirement & risk appetite. Your home country may restrict, but in India barring few exceptions, NRIs are allowed to invest in many options. Here is the comprehensive List updated till April 2020.

India has rapidly grown and provides the potential of sharing that growth in the form of investment returns. NRIs also has an emotional reason to invest. Having a part of India in their portfolio gives them a reason to attach, keep abreast & visit India. Here is a complete checklist of all the investment options for NRIs to invest in India.

Best Investment Options for NRIs in India

Fixed Deposit for NRI

Let’s start from the safest option – Fixed Deposit or FD as it is called in short.

NRI can invest in FD from NRE or NRO account.

Banks offer 3 types of FDs –

NRE FD: Funds originate from overseas earnings. Both Principal  & Interest is repatriable freely. Interest is tax-free.

NRO FD: NRE FD: Funds originate from Indian earnings. Principal  & Interest is repatriable but on fulfilling certain conditions & yearly limits. Interest is taxable.

FCNR: Features similar to NRE FD. The only difference is principal & interest are in foreign currency.

NRO FD Interest Rates for Various Banks (Updated)

NRE FD Interest Rates for Various Banks (Updated)

FCNR FD Interest Rates for Various Banks (Updated)

Company Fixed Deposit (FD) for NRI

Few companies in India call for funds from retails investors. NRIs are also allowed to invest in few of these. One should check the business strength of these companies before investing in them. One of the ways to judge this is credit rating of these corporates. NRIs must favor companies like HDFC Ltd, ICICI Home Finance, Mahindra & Mahindra etc. Mind this fact that credit ratings keep on changing too if the rating company feels that the financial stability has changed.

Also, interest rates for company FD are taxable. So returns wise it will better to go for NRE FD with bank. If you are not paying or in lower tax bracket, one can prefer company FD to NRO FD.

Equity Investments for NRI

NRIs can invest in Indian Equity. This can be done by applying of PIS or PINS account, through Mutual Funds or PMS (Portfolio Management Scheme).

Having a PIS account helps to invest directly in shares and transacting in equity markets. One can also purchase ETFs (exchange-traded funds) & REITs (Real Estate Investment Trusts). Opening a PIS account is mandatory for this.

Mutual Funds have many scheme categories and NRIs can invest in Large Cap Funds, Large & Midcap Fund, Mid Cap Funds, Small Cap Funds, ELSS Funds, Index Funds, Sectoral funds as per their choice.

One needs to complete KYC & documentation before investing.

NRIs can choose to invest via SIP or lumpsum mode.

Only NRIs from US & Canada having some restrictions on investing by some MFs. Other investors can freely invest in all mutual funds in India. (Details)

PMS is another option to invest in. The minimum size of an investment is 50 Lakhs in INR. Investing in PMS offers certain freedom over mutual funds but these facility come at a cost.

Investment Options for NRIs – Debt Funds, NCDs & Bonds for NRI

In debt, there are 3 Investment Options for NRIs – A Mutual Fund or Buying NCDs or Bonds through primary (issues) or secondary markets.

Debt fund provides many options like overnight funds, liquid funds, short term funds, income funds, dynamic bond funds, GILT funds, etc.

NRI can also invest by applying for NCDs (if allowed by the issuer). They can also buy existing bonds by buying through an exchange.

Government of India has introduced a separate route viz., Fully Accessible Route (FAR) for investment by non-residents in securities issued by the Government of India. This direction shall come in effect from 01^st April 2020. We shall provide details when the mode is ready.

PPF for NRI

NRIs if you have a Public Provident Fund account can invest in it till maturity. If and NRI does not have a PPF, he cannot open a new account after becoming NRI.

NPS for NRI

If you are planning to come back and settle in India in the future, NPS is a great Investment Options for NRIs.

NPS is an annuity product at a very reasonable cost. The good thing is NRIs & OCI can invest in NPS. Investment in NPS can be done and managed online.

If you are filing and paying tax in India, NPS can be used to save tax under section 80 CCD (1B).

Real Estate or Property Investment Options for NRIs

Acquiring a piece of land, a portion in a locality or a shop in India is cherished by NRIs. NRIs have been a prime driver of demand for Real Estate in India.

Real Estate is a physical asset whereas all discussed above are financial assets.

Real Estate can be residential or commercial. Agricultural Properties (Farms etc) are not allowed for NRI investment.

One can also earn by renting the property. Many NRIs buy property for their Retirement Years or for their families in India.

Rules related to Buying, Selling & Renting involve many regulations like TDS, etc which are not applicable for a resident. One must adhere to these rules.

Contact me through the comments section or email for your individual queries on Investment Options for NRIs.

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