If you are an NRI, India actually
has a lot more good investment options compared to what you think. Not only
that, you get fruitful returns on the investment you make. However, you do need
one of the NRI accounts, namely, the NRE, NRO or FCNR bank account. Here are
what you can do with these accounts and the advantages and disadvantages of
each.
- National Pension Scheme (NPS)
This is when a principal is invested
after which an annuity is claimed by the investor. It can be availed by any NRI
in between the ages of 18 and 60. Funds can be transferred from an NRO or NRE account. However, this cannot be done from an FCNR account. Also, whenever an
NRI gives up his citizenship, he loses his NPS account.
- Fixed deposits
An FCNR or NRE account is preferable
as compared to an NRO account when it comes to fixed deposits. This is because
the NRE and FCNR account are tax-free in India, whereas an NRO account cannot
be repatriated and is taxable at its source. Also, ever since the RBI was
linked to LIBOR, NRE fixed deposits can get up to an 8.5% return whereas with
an NRO you can only get up to 7.75%.
- CDs
A CD is a certificate of deposit.
They are basically a liquid form of a time deposit. However, NRIs can only
subscribe to CDs on a repatriable basis. This means that it can be moved from
one country to another. The rate of return on these are also higher than a
fixed deposit.
- Bonds
These are not just bonds but bonds
which cannot be redeemed in India. They are usually used by a company or the
government when long-term investment is the goal. The coupon rate for March
2015 is between 9.48% and 10.75%. However, banks do lock your principal amount
for quite some time.
- Mutual funds
These can be either debt mutual
funds or equity mutual funds. Debt mutual funds are when investments are
done in fixed income securities. Among these, money market instruments,
treasury bills, and corporate bonds are included. Equity funds are the other
type of mutual fund. However, it has been highly recommended by financial
experts to use hybrid funds for mid-term investments.
Mutual funds, bonds, CDs, fixed
deposits and the national pension scheme are just some of the ways that NRIs
settled abroad can avail the financial markets in India. However, it all
depends on your financial requirements and what you plan to do with it in the
future.
