NRI always looks for opportunities to invest. The option to invest should be based on Risk Profile, Time Horizon & Goal-Based. Here is an attempt to provide complete details on all the investment options for NRI (s) at Low-Risk Category.

We have also written the following:

Investment Options for NRI – Moderate Risk Category (Click To Read)

Investment Options for NRI – High-Risk Category (Click To Read)

These are updated till March 2020. We shall keep updating when we have new information.

When a Low-Risk Category Scheme is to be used by NRI?

Low-risk options should be used when:

When you do not want to risk principal not even for some time.
You expect low/moderate returns.
Your goal also fall, for which you are investing is also a short-medium horizon
When you have a part of a portfolio which is high in risk. You are diversifying to the low-risk scheme to balance your portfolio.

Low-Risk Investment Options for NRI

NRE FD for NRIs

Various banks offer fixed deposits or NRE FDs. (For Other Bank Accounts for NRI – Click Here)

NRE FD means fixed deposit invested from the funds earned from abroad.

The best feature is – Interest earned is Tax-Free. Reason – In India, you only pay taxes on income earned in India and not global. So NRE interest is tax-free.

As the deposit is tax free there is no Tax Deduction at Source (TDS).

So, if you are in a 30% bracket and getting 5.5% on NRE FD, it means you are earning 7.15% in actual.

Point to note is in India the NRE FD is Tax Free, but your country of residence may tax it. So be aware of that.

The a/c can only be opened in the name of NRI individuals – single/joint.

Tenure can be 1 to 10 years.

FDs are a bank product and offered by Banks regulated by RBI. So a safe option. Both Principal & Interest are repatriable making it one of the most reliable investment options for NRI.

NRE FD Interest Rates for Various Banks (Updated)

NRO FD For NRIs

Your Indian earning can also be used to invest in fixed deposits called the NRO FDs. NRO FDs are taxable and interest is added to your income.

You also face TDS at the rate of 30% on NRO FDs.

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NRO FDs are in Indian Currency only. The interest is repatriatable as per LRS. This is investment options for NRI who have incoome form domestic sources (rent, interest, etc) after they have moved out of India.

NRO FD Interest Rates for Various Banks (Updated)

FCNR FD for NRIs

NRIs have earnings and business in foreign income. Converting to Indian Currency & than making a fixed deposit and again converting it back on maturity will entail foreign currency depreciation risk. So to counter these banks offer FCNR FDs which are foreign currency dominated.

FCNR or Foreign Currency …. It can be in any currency but majorly issued in these 6 currencies – Pound Sterling, US Dollar, Euro, Japanese Yen, Canadian Dollar, and Australian Dollar.

Tenure is from 1 to 5 years.

Interest is tax-free till a person is NRI or RNOR.

Funds (Principal & Interest) is fully repatriable in foreign currencies.

For deposit less than a year no compounding is done. But for a deposit over 1 Year, the rate is compounded half-yearly.

FCNR FD Interest Rates for Various Banks (Updated)

Company Fixed Deposits for NRIs

Company Fixed Deposit or an NCD is a good investment option for the investors who wish to earn a higher rate of interest compared to a bank fixed deposit.

NRI can also invest in company fixed deposit if allowed by the company. For NCDs, RBI has certain conditions that an NRI should follow. These are:

The investment amount must be debited from the NRO (Non-Resident Ordinary) account of NRI only, not from the NRE (Non-Resident External) account.
Principal & Interest amount at the time of maturity, should only be credited back to the NRO account only, not in the NRE account.

The amount received at the time of maturity would be non-repatriable, can’t be taken back to the country of residence.

Company FDs are available for various tenures like 6 months, 12 Months, 18 months, 24 Months, 30 Months, 36 Months, 4-10 years.

Interest is fully taxable and is added to your income. There is a TDS of 30% when interest exceeds Rs 5000 in a year.

PPF (Public Provident Fund) for NRIs

As an NRI you cannot open a new PPF account.

But, in case you have a PPF account while a resident and then your status changes to NR, you can continue your account till maturity without extension. Details

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PPF also is the safest option as it contains fixed returns & is tax-free on maturity.

However, the drawback is – the maximum amount of contribution can be 1.5 lakhs in a year and it has a long maturity of 15 years.

NSC (National Savings Certificates) for NRIs

NRIs can now not invest in NSC. In case you had NSC while Resident and now your status has changed to NRI, it is better to surrender NSCs as they will earn interest rate equivalent to Savings Account from the day you have become NRI. So it is better to exit and invest somewhere else. Details

Debt Mutual Funds for NRIs

When you hear Mutual Funds – it does not mean one is investing in stocks only.

There is an entire category called Debt Category Mutual Funds which can be used to invest when one has to take less risk.

Debt funds are those types of mutual funds which invests only in Central & State Government Securities, Bonds issued by Companies, CD’s issued by Banks & short duration papers issued by Reserve Bank of India. Debt funds are not allowed in equity shares of the companies.

There are different types of debt funds depending upon the investment objective & time horizon.

Overnight Fund: Investment in overnight securities having maturity of 1 day. Ideal for 1-30 days.

Liquid Fund: Investment in Debt and money market securities with maturity of up to 91 days only. Ideal for 30 days to 3 months.

Ultra Short Duration Fund: Investment in Debt & Money Market instruments which has a duration of the portfolio is between 3 months – 6 months.

Low Duration Fund: Investment in Debt & Money Market instruments which has a duration of the portfolio is between 6 months- 12 months.

Money Market Fund: Investment in Money Market instruments which has having maturity up to 1 year.

Short Duration Fund: Investment in Debt & Money Market instruments which has a duration of the portfolio between 1 to 3 years.

Medium Duration Fund: Investment in Debt & Money Market instruments which has a duration of the portfolio between 3 to 4 years.

Medium to Long Duration Fund: Investment in Debt & Money Market instruments which has a duration of the portfolio between 4 to 7 years.

Long Duration Fund: Investment in Debt & Money Market Instruments which has a duration of the portfolio for more than 7 years.

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Corporate Bond Funds: More than 80% investment in AAA-rated paper of corporate only.

Gilt Funds: These funds invest a minimum of 80% of total assets in government securities. These funds are called gilt funds as they invest in securities that are issued by the central government.