Investment Options In India For NRI
NRIs have been provided with a multitude of investment options in India:
NRIs are permitted to open foreign currency (FCNR) account which can be opened in five major currencies, viz., US Dollar, Pound Sterling, Deutsche Mark, Euro and Japanese Yen. These accounts are opened for periods ranging from 12 months to 3 years. Accounts may be opened with funds remitted from outside, existing NRE/ FCNR accounts, etc. Conversion to currency other than the designated currency also permitted at the risk and cost of the remitter. As per RBI guidelines, banks are free to offer interest on FCNR deposits below LIBOR rates, less 25 basis points for deposits between 6 months to one year, and LIBOR rates plus 50 basis points for deposits over a year. NRI deposits such as the FCNR can continue untill the maturity date at the contracted rate of interest even after the account holder’s resident status changes to resident Indian.
A person resident in India can open, hold and maintain with an authorized dealer in India, a Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, Bank notes and travelers cheques from any of the sources like, payment for services rendered abroad, as honorarium, gift, services rendered or in settlement of any lawful obligation from any person not resident in India. These accounts can be held singly or jointly in the names of eligible persons. Such accounts can be maintained in the form of savings bank, current accounts and term deposits.
Term deposit accounts:
Term deposits can be opened by remittances from abroad or by transfer of funds from existing NRE/FCNR/NRO/NRSR accounts of the same person with other banks in India or from other branches of the bank or by tendering foreign currency notes/ travelers cheques brought by NRI’s during their visit to India.
Non-resident Non-repatriable Rupee Deposit Scheme:
These accounts can be opened by way of transfer of funds from abroad or from existing NRE/FCNR accounts. Deposits period ranges from 6 months to 3 years and the deposits are maintained in Indian Rupees only on a non-repatriable basis.
Non-Repatriable Deposit Accounts (NRO):
Any person or entity residing outside India is entitled to open an NRO account with an authorized dealer or an authorized bank for transactions conducted in Indian Rupees. Individuals or entities of Bangladeshi or Pakistani nationality or ownership require approval from the RBI. The local funds of an NRI viz, rent, dividend, interest, sale proceeds of securities, property, etc. can be credited to these accounts and balances can also be placed in term deposits. Incomes earned on investments done on non-repatriable basis are to be credited to NRO account. After completion of formalities, an eligible amount can be repatriated.
Special term deposit accounts:
These are reinvestment deposits. Interest earned on these deposits are added to the principal and compounded at quarterly intervals. The principal amount together with interest is repaid on maturity of the deposit.
All conditions pertaining to Special Term deposits are applicable for Cash Certificate Deposits.
Thrift Deposit Scheme:
It is a recurring deposit scheme where fixed sums are deposited every month for a fixed period. Compound interest is payable at the same rates as applicable to other term deposits. Loan facility is also available.
It is a fixed deposit scheme where you can withdraw your deposit to the extent of your need and leave the remaining amount undisturbed to earn you interest at the contracted rate.
Apart from these NRIs are permitted to make direct investments in proprietary/partnership concerns in India as also in shares/debentures of Indian companies. They are also permitted to make portfolio investments i.e. purchase of shares/debentures of Indian companies through stock exchanges in India. These facilities are granted both on repatriation and non-repatriation basis.
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