How popular is investment in real
estate and stocks and shares among NRIs?
Non-resident Indians are increasingly inclined towards ploughing
back redemption proceeds from various NRI deposit schemes and
investing them in real estate and stock markets. They are picking
up equity stakes in Indian companies and form a major component
of the country's foreign direct investment (FDI).
What basics should be kept in mind to invest for long
term in equities?
Knowing your time horizon of investment, risk and return expected
on the investment and scrutinizing your overall financial position
and long term goals before investing is the key to a wise investment.
What are the chosen routes through which NRIs can invest
in India?
Equities, Property and Mutual Funds are the three most sustaining
ways for an NRI to invest.
Why are mutual funds considered to be the best way to
enjoy the benefits of investing in Indian equities?
Mutual funds are managed by professionals who know the nitty-gritty
of it. Local broker can be unreliable.
Is approval for RBI required to invest in mutual fund
scheme?
For an NRI, no specific approval for investing or redeeming from
mutual fund is required. Only OCBs and FIIs require approvals
for it.
Can government securities/ UTI units be transferred
or sold?
Yes, provided the transfers/sales are arranged through an authorized
dealer. Repurchase can be done directly by UTI.
Can proceeds of National Saving Certificate or government
securities be repatriated?
Sale/maturity of proceeds of such securities can be repatriated
if the purchase was made out of funds remitted from abroad or
out of NRE/FCNR accounts. In case of the purchase being made out
of NRO accounts, it can only be credited to NRO accounts and cannot
be remitted abroad.
What is Portfolio Investment Scheme?
The Portfolio Investment Scheme allows NRIs to acquire shares/debentures
of Indian companies or units of domestic Mutual Funds through
the stock exchange(s) in India.
Is there any ceiling on investment under the Portfolio
Investment Scheme?
There is an overall ceiling of 5% of paid-up share capital of
the company/paid-up value of each series of convertible debentures
for purchase by NRIs/OCBs. However the ceiling can be raised to
24% if the company concerned passes a resolution to that effect
in its general body meeting.
NRIs/OCBs can make investment up to 1% of the paid-up share capital/each
series of convertible debentures. For domestic mutual funds, there
is no ceiling.
What specific conditions need to be fulfilled for investing
in mutual funds schemes on repatriable basis?
In order to invest on a repatriable basis, you must have an NRI
or FCNR bank account in India. The mutual fund should comply with
the terms and conditions stipulated by SEBI, the amount representing
investment should be received by inward remittance through normal
banking channels or by debit to NREAccount/ FCNR account of the NRI. The
dividend/interest of units may be remitted through normal banking
channels or credited to NCR/FCNR account of the investor.
When can earnings on investments be repatriated?
For investments made on a repatriation basis, the net income or
capital gains after tax arising out of investment is eligible
for repatriation subject to regularity guidelines at the time
of the repatriation. In the case of investment is made on a non-repatriation
basis, only the net income, i.e., dividend arising out of investment
is eligible for repatriation.
Can loans be granted abroad against collateral of the
shares/debentures of Indian companies?
Yes. Authorized dealers have the power to grant loans/overdrafts
abroad to NRIs through their overseas branches and correspondents
against collateral of the shares/debentures of Indian companies
only if the concerned shares/debentures were acquired on repatriation
basis
For how long is the permission valid for buying shares/debentures
and units of domestic mutual funds?
Approval from the Reserve Bank is valid for a period of five years from
the date of issue. This can be renewed by a request by means of a simple
letter.
What if these rules are all too hard?
You can invest overseas through a local share trading platform https://www.sharetrading.hsbc.com.au/tradenow/
