All You Need to Know About Portfolio Investment Scheme

Non-Resident Indians are always looking for investment options that will prove beneficial in the long run. If you are too one among them, then portfolio investment scheme is an answer for you!

What is Portfolio Investment Scheme?

Portfolio Investment Scheme (PIS) is basically a Scheme of Reserve Bank of India that helps both Non-Resident Indian (NRI) and Overseas Corporate Body (OCB) to sell and purchase shares and convertible debentures of Indian companies on a documented stock exchange. It allows NRIs to invest in the shares of the Indian companies in the secondary market, under non-repatriation and repatriation basis. It covers a number of securities like bonds, stocks and other types of investment vehicles.

You should know, Portfolio Investment Scheme is all about reducing risks than growing returns. An investment can be easily made under both repatriation and non-repartition basis, but then it is important for the NRI to open a Non-Resident Rupee (NRE) and Non-Resident Ordinary Rupee (NRO) with any of the bank. The sale that is acquired of non-repatriable investment should be collected in NRO account only. Furthermore, it is important for the NRI to have a separate bank account, especially for PIS purposes.

Some of the key features of the NRE portfolio investment in India includes:

• When it comes to investments, it is essential for an NRI to have a PIS account. The same account will be used for investments in the secondary market on repartition basis. When it comes to investments on non-repatriation basis, it is vital to do it directly from the NRO savings bank account. Non-Resident Rupee (NRE) PIS account is independent which can be used by NRIs for their needs. All the sale and purchase transactions are well captured and are further reported by your bank to the RBI.

• It is wise to know that NRIs cannot hold more than one PIS account with multiple banks. An NRI should submit all the original sale and purchase contract notes within 24/48 hours of contract execution to the designated bank with whom your PIS account is maintained.

• Another vital aspect an NRI should know is that all the shares that are purchased on the stock exchange under the portfolio investment scheme cannot be in any case should be transferred by way of sale under private arrangement. Furthermore, it should also not be given as a gift to a person who is a resident of India or outside India without prior permission from the RBI.

• NRIs that hold valid PIS permission can trade in convertible debentures and shares of the Indian companies that are recorded on recognised stock exchanges, whether on repatriation or non-repatriation basis.

• Your PIS account can be operated by your friend or relative only when you avail the mandate of power of attorney facility. This makes easier for your relative or friend to conduct the transactions on your behalf.

Get to Know Different NRI Investment Options

Indians who have settled abroad have the right to invest in India. There are a number of safe NRI investment options in India. However, before you invest, it is of paramount importance to understand the tax implications, including both capital gains tax and income tax. One of the major reason why Non-Resident Indians (NRIs) prefer investing in India is that of the higher returns on conversion. NRIs are eager to invest in India considering the fact it is emerging country. Mentioned is the list of the investment options for NRIs:

Direct Equity:

If you are someone who wants higher returns on your investment, then Direct equity is the answer. Investing in stock markets is one of the best options for lucrative NRI investments. However, it is wise that you keep track of the stock market for best results. These markets are sensitive and observing it regularly is of paramount importance. In order to invest in the same, all you need is bank, trading and demat accounts. As you are an NRI investor, you might even have some special services.  You either have the option to invest for a short-term or long-term. The returns depend on the investment and trading strategies you use. You should be prepared for any risks as the prices tend to fluctuate in the stock market.

Mutual Funds

Another NRI investment option is mutual funds. Mutual funds do the work of safeguarding your assets. However, before investing, it is wise to check the asset management’s company’s rules. A lot of mutual funds offer NRIs with Systematic Investment Plan (SIPs) that further allows an investor to break the total investment into either quarterly or monthly investments. It is wise to invest on the repatriable or non-repatriable basis. Have a Non-Resident Rupee (NRE) or Foreign Currency Non-Residential Account (FCNR) account with a bank in India, if you plan to invest on a repatriable basis. In this, the investment money is sent through usual banking channels. While if the investment is made based on non-repatriation, it offers funds from the Non-Resident Ordinary Rupee (NRO) or NRE/FCNR account of the investor. 

Realty Investment

Real estate investment plays a major role in ensuring you get high returns. As compared to direct realty investment, Real Estate Investment Trust (REIT) is more liquid. An NRI can invest in either commercial or residential property, but cannot invest in agricultural lands.

NRE / NRO / FCNR Fixed Deposits
An NRI can easily invest money in a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account. It is one of the most considered NRI investment in India. The money held in these two accounts is in rupees. An NRI can access this as a term deposit account, a normal savings account or even current account. You can even consider investing in FCNR account in which the money is deposited in foreign currency.

Steps to Open an NRI Account from Overseas

When it comes to banking, there are innumerable options for every kind. An Indian resident staying abroad can easily rely on Non-Resident Indian or NRI banking. It is a great way to ensure your banking needs are well taken care of despite staying overseas. An NRI account is definitely a handy tool. When it comes to opening an NRI account, it becomes difficult to do so as the NRI requires visiting the branch for the same to get done with the account opening formalities. To make it easier, NRIs now can easily open their account at the convenience of their homes by following these steps:

Download the Form:

The first step towards opening your NRI account is by downloading the form from the bank you want. These are offered by a number of banks offering NRI services, and hence you are advised to read the benefits offered with the NRI account as it tends to differ from one bank to another. There are some banks who also offers the option of filling up the form online itself.

Know the Documents Needed:

Before the account is opened, an NRI has to submit the necessary documents. It majorly includes approved the proof of identity, proof of address, proof of NRI or PIO status. It should be in the form of passport copies with a valid visa or PIO card.

Additional KYC:

There are some banks in which an applicant may have to fill up additional KYC format in order to disclose the tax residency status and all the other related under the CRS and FATCA requirement. This further requires the applicant to submit additional documents and proofs along with the account opening form.

Attestation:

It is vital the documents you submit are attested by the Indian Consulate or overseas bank or should be notarized by a foreign notary. Apart from this, an applicant also has to provide additional proof with self-attestation.

Dispatch:

To ensure the form and the other documents reach to the bank safely, it is of paramount importance to dispatch it using the right address. In some countries, banks also offer PO Box service in which NRI can easily drop the application in the post box with the right PO box number.

Certain Points to Remember:

To get the best NRI services in India, you can get in touch with the banks to get more details. The experts are glad to be of your help in more than one way. The experts offer all the assistance needed to complete the account opening formalities.

How to make your trips abroad hassle free today?

When it comes to travelling abroad, no matter the purpose, there are several factors you need to take into consideration. Amongst the various factors, your financial investment and expenditures will be taken into consideration. While there are several options you can consider for these purposes, the travel card is one option you can consider.

Travel cards as the name suggests is a form of banking card that offers prepaid facilities providing you with a foreign currency of your choice. You can easily load a fixed amount of funds in your local currency on the card and withdraw or make transactions in a foreign currency. You can estimate your spending with these cards and invest the amount that satisfies your requirements. In this way, it makes your overseas trip hassle free and effective.

If you are planning to use the travel card for any of your upcoming trips, here are a few tip you can take into consideration:

• Before purchasing a travel card, ensure that you have sufficient knowledge about it. For example, you may not be able to use the card in certain countries to pay fuel bills or tools due to security issues. In this case, you should ensure that you have sufficient cash on your hand.

• As soon as you get the card, remember to change the default PIN before you travel abroad to prevent any misuse. Additionally, with a changed PIN you can also avoid the chance of getting a rejection overseas especially at ATM counters.

• If you need to withdraw funds, be aware of the withdrawal charges. In certain places or countries, there can be an extra fee on transactions. Look out for travel cards that offer you free withdrawals around the world to avoid these extra fees.

• Keep track of your available balance on your travel card. You can do this through the ATM, email statements or SMS updates. You can even get a mobile application downloaded to track all your transactions.

• Avoid using your travel cards for security deposits, especially if you need to clear up your hotel bills. In some cases, the balance amount in the travel card may get blocked for a certain period.

• Always check the current conversion value before proceeding with any transaction. This will help you gauge how much funds you will be actually spending with each transaction on your card

• If you have the option to pay in the local currency, avail it. In the event you don’t take advantage, your retailer may convert it into foreign currency.

• In the event, you lose your card, or it is stolen; you must block your travel cards immediately. Most cards come with a  replacement one, so you can always use this card as a backup.

• If you are planning to use this card for a long period, over different travel trips, ensure that you are aware of the expiry date of the card.

What are the different factors that contribute to the changes in forex rates?

The forex exchange market is a global market where the trading of currencies is done all throughout the day and night. As an investor in this market, the rate of which these currencies are exchanged is very important. This is because the currency is used to determine the economic status or growth of that particular country, in comparison to other countries. As these features change, so does the rate of the currency.

This rate is normally monitored and constantly evaluated, as it is a key to determine the factor for the country’s economic stability. As mentioned previously, forex investors and those who frequently send foreign funds abroad would need to constantly screen the exchange rate so as to know the appropriate time to make a transfer or transactions.
Given below are some critical factors that play an important role in determining the rise and fall of the exchange rate. This will go a long way to help you understand the suitable time to transfer or receive funds:

Inflation rates in the market: The variations in the market inflation rates is one of the critical aspects affecting the exchange rate of the country.  Country’s that possess a low inflation rate normally have a stronger value of currency, as compared to countries that have a high inflation rate. However, this is only applicable if the other factors are held constant. If the inflation rate is low, goods and services tend to appreciate at a slow rate as compared to countries that have a high inflation rate. If the low inflation rates are maintained for a longer period of time, the value of the currency appreciates steadily.

Interest rate charges: Forex exchange rates, interest rates and rates of inflation are always interrelated while playing a big role in determining the stability of the market. Any changes in the interest rate will affect the value of the currency and in turn, the exchange rate. Any increase in the interest rate will increase the value of the forex currency. This normally occurs, when the borrowers are charged a higher interest and in turn, attracts a foreign capital. This causes the exchange rates to go up.

Debt accrued by the government: Any unpaid dues by the central government are always considered as a civic debt and furthermore a liability. The bigger the debt, the less likely the government will negotiate to get a better foreign capital. This in turn, results in the increased inflation in the country. When this occurs, investors tend to trade bonds when the debts are too high. Consequently, this will always lead to the fall in the value of the current exchange rate.

Business Loan: All you need to know about defaulting and how to avoid it

All business, no matter big or small, will require financial assistance at some point in their lives. This is when the business loan will prove to be the ideal solution. This loan for business is designed in such a manner, keeping in mind the unique requirements and functioning of each business while ensuring all the financial requirements are met.

However, even the best run business can hit an unexpected cash flow problem, especially if a major customer of theirs fails to pay. In this case, the best of intentions can go out of the window. So if you find yourself and your business in a position where you’ve missed your payment on your loan you’ve taken on your business what can you do?

Normally, as soon as your lender realizes that you have defaulted, they will be in touch. Each lender will normally have a different policy on their issues. While some do offer a grace period if your payments are not too late. However, if the matter does not get resolved, your lender will report the late payment to the credit bureaus, which in turn can damage your credit score. This will in turn, make it more difficult for you to secure your finances in the future.

Here are some of the default scenarios that can occur to your business:

• Defaulting on a secured loan: If the business loan is secured on an asset, there is a high chance your lender will claim the said collateral to repay the debt. This can be anything from your business to your home or any other similar asset of high value.

• Defaulting on an unsecured loan: An unsecured loan will be completely different from the secured loan scenarios. For one, you lender won’t be able to seize any asset of yours. However, they will charge a late payment fee, and possibly increase your interest rate. If you further cannot repay back the borrowed funds, they can purse a legal solution against your company. In this case, you may be forces to liquidate your assets to pay the settlements.

• Defaulting on a personal guarantee: If you fail to repay a loan for business wherein which, you stand as a personal guarantee, the lender can pursue you personally and not just your company itself. If the court upholds your claim, the lenders can seize your personal assets and liquidate them to cover the debt.
So what can you do to avoid getting into this position?

As you can see, the consequence of defaulting on your loan can be either extremely sever or mundane. Therefore, you should very cautious about taking on a new loan, in order to avoid increasing your debts. You must pay close attention to your cash flow, ensuring that you will have the required funds on your hands to make the loan payments in a timely manner. If you find yourself in a position where you will be unable to meet a payment, you must contact your lender immediately and explain your situation. In this case,  most lenders will work with your in your interest and their own.

Factors you need to keep in mind when opting for used car loan

When it comes to purchasing a car, whether new or old, there are plenty of factors you need to consider. One of which includes the financial aspect of the purchase. In such a case, several individuals prefer to opt for a used car loan to facilitate the purchase.

These used car loans offer several benefits, one of which includes a loan amount that will be equivalent to the purchase of the car. Additionally, it offers the ideal repayment procedure wherein which, you will be able to repay back the loan amount over a flexible period.

However, before you opt for this loan, you will first need to consider certain factors like any other loan. They include the following:

Know the seller: It is crucial that you are aware of the individual who is selling the vehicle to you. You must ensure that seller is the actual title holder. Ensure that you collect and verify the seller’s credentials by collecting the contact details. You can even request a copy of the title and match the seller’s name to ensure that you are aware of the rightful owner of the vehicle. You should be aware of anyone who is selling a vehicle without the title or on behalf of someone else as it could be a duplicitous transaction.

Know the vehicle: Before you purchase the vehicle, you will first need to check how the well does the vehicle perform. A simple test drive may not be able to reveal what’s really going on. However, you can opt for online tools and resources that will help you investigate maintenance and accident history. You can even get a trusted mechanic to conduct a thorough inspection.

Know your options: Consumers will often pay cash for a purchase of a private party vehicle. Alternatively, they will also obtain an auto finance, similar to used car loans, to facilitate the purchase. In this case, it may require the buyer to provide information about the vehicle and seller information along with the copy of the title. If there is a lien on the vehicle by the financial institution, you may need to take appropriate steps to get it released after the sale.

Know the paperwork: All the elements of the vehicle such as the hood, driver door, dash and other similar elements possess a vehicle identification number. You need to match the title and the paperwork keeping in mind these vehicle identification numbers (VIN) as very often car thieves often replace these VIN’s from stolen cars from those that belong to a legally registered vehicle. This is normally done through a process known and cloning or retagging, wherein which the car’s true history is covered through the forging of title documents. This titling process is a crucial step, especially when it comes to applying for the used car loan, as the financial institute will verify the documents before processing the loan.