Know more about NRI Investment ...

Following our last week discussion, we would like to focus this week on investment opportunities available to NRIs. An NRI enjoys the following benefits for investment in India. NRI investments are governed under the Foreign Exchange Management Act, 1999 (FEMA), regulations specified by the Securities and Exchange Board of India (SEBI), the Foreign Direct Investment policy of the ministry of commerce (the FDI Policy).

To invest in India, NRI may need permission from RBI for certain products and some are already allowed by RBI, through the automatic route.

Different areas to invest in India

·         Investment in Shares & Debentures

a.    Under RBI and FEMA, Non-Resident Indians (NRIs) is permitted to invest in the capital markets in India through the Portfolio Investment Scheme design (PIS). Under this Scheme, NRIs can acquire shares/debentures of Indian companies through the stock markets in India.

b.    It also allows full benefits of repatriation of capital and income thereon.

c.    These investments are permitted through designated branches of authorized dealers seeking prior approval of RBI.

d.   Even a local resident or authorized stock broker can be authorized by NRI to carry on transactions on their behalf.

e.    There is a general ceiling of 5% of paid-up share capital of the company/paid-up value of each series of convertible debentures for purchase) for total investment by NRI/OCB. The overall ceiling can be raised to 24% if the company concerned passes a resolution to that effect in its general body meeting. On individual basis, NRIs/OCBs can make investment upto 1% of the paid-up share capital/each series of convertible debentures.

f.     Investment in new/rights / bonus issue doesn’t not require permission from RBI except for few exception on non repatriation basis.

·         Investment in Government securities – The investment has to be routed through the authorized dealer (discussed above). In some cases, investment in Unit Trust Of India can be directed directly to the entity. Investment proceeds can only be repatriated back abroad if the funds invested were parked in the NRE account. Otherwise the proceeds can only be credited in NRO accounts and not remitted outside.

·         Investment in National Saving Certificates issued by Post offices – the rules regarding the lock in and purchase /sell for the certificate are same as resident Indian.

·     Investment in Company deposits – Investment in company deposits on repatriation basis is allowed with a minimum tenure of three years.

·       Investment in Commercial Papers & Treasury Bills on non repatriation basis 

·       Investment in mutual Funds – it is allowed on repatriation basis in lines similar to stocks / debentures under the Portfolio Scheme.

·         Investment in Real Estate

a)   Any Indian citizen outside India doesn’t require any permission from RBI to purchase property in India except agricultural land.

b)   Any Indian citizen outside India doesn’t require any permission from RBI to transfer any property to other citizen of India except agricultural land.

c)   Beyond the above, the rules for Person of Indian Origin and property, land received as gift or transferred as gift are different

 

To know more about in detail about the process to invest in any of the above or more clarification email us at saarthifp@gmail.com