Generally, NRIs (Non-Resident Indians) want to invest money in India to build financial assets in their homeland, attain financial stability, flow cash to their family, generate a high return on investment, and create a corpus for retirement.
However, very few people know that there are various investment options available for NRIs in the Indian market. Some of the investment avenues are given below:
Fixed Deposit (FD) is a popular investment option for Indian residents, as well as NRIs. For bank FDs are one of the simplest investment options for individuals. NRIs can apply for fixed deposits with their NRO, FCNR, or NRE accounts.
The FD interest rates depend on a particular bank, tenure of deposit, and the amount you deposit. Usually, banks and other financial institutions offer a higher interest rate on a more elevated amount deposited for a long tenure. Moreover, senior citizens get a higher interest rate.
National Pension Scheme
National Pension Scheme (NPS) is a government-based scheme that comes with fantastic tax benefits. The accumulated amount at the maturity period is tax-free. Anyone aged between 18 and 60 years is eligible for investing in NPS. Furthermore, NPS provides an annual interest rate of around 12% to 14%.
Public Provident Fund
Another good investment option for NRIs is the Public Provident Fund (PPF). It is also a government-based scheme like NPS. Indian residents, as well as non-resident Indian citizens, can invest in PPF at a current rate of return, which is around 8% per annum. This investment option has a lock-in period of approximately 15 years, and one can invest a maximum INR 1.5 lakh per year in their PPF account. Even PPF investment provides tax deductions as per Section 80C.
For aggressive investors who are willing to take a particular risk, equity is a great investment option. NRIs are eligible for directly investing in the Indian stock market, according to the Portfolio Investment Scheme (PIS) by RBI. NRIs must have an NRO/NRE account, trading account, and Demat account for investing in the stock market. Since stock markets in India have been increasing lately, it is expected to draw the attention of NRIs in the future.
Mutual funds are considered to have a moderate risk, as it’s not considered as risky as a stock market investment, nor are these less risky than bank FDs. Since mutual funds can offer higher returns compared to a fixed deposit, many NRIs consider investing in mutual funds. Individual fund houses are providing different funds for investing. You can choose it according to your financial goals and risk profile.
NRIs are eligible for investing in mutual funds via their NRE or NRO accounts. However, they can invest only in INR (Indian Rupees) and not any foreign currency. Furthermore, the mutual fund’s rate of returns depends on the type of invested fund, such as equity, debt, and hybrid.
There are different options to choose from for NRI investment. But you need to analyze your risk profile and financial requirements before making the investment decision. Investing in India is considered to be an excellent option for NRIs, as the country is expected to grow economically and see more developmental activities in the future.