Non-residential Indians can invest in the Indian stock markets under the portfolio investment scheme of the Reserve Bank of India (RBI). An NRI must open a Non Resident Rupee (NRE) account or a Non Resident Ordinary Rupee (NRO) account with an RBI-approved Indian bank. However, there are several things to be kept in mind before going ahead with an NRI investment. Here follows a list of things that will help in NRI investment in the country’s stock market.
– Any type of invest made by an NRI must be in local currency, which is rupee. If you are interesting in investing into mutual funds, you must have three bank accounts – Non-Residential Rupee account, Non-Residential Ordinary Rupee account, and the Foreign Currency Non-Resident Account (FCNR).
– The amount that you want to invest can be directly debited from the NRE or NRO account or received via inward remittances of general banking channels.
– The investor needs to produce a rupee cheque or draft from his NRE or NRO account or send a draft or cheque issued by an exchange house in abroad drawn on its corresponding Indian bank.
– Investments made with cheque or draft should also have an attached foreign inward remittance certificate (FIRC)or a letter issued by the bank that confirms the source of the investment made.
– Along with this, an NRI investor also needs to include general documents like proof of identity and address just like the resident investors.
– If you are a foreign investor, it can be quite a challenge to keep a track of your money and to react to certain market situations. Mutual funds allow you to have a power of attorney holder who can take a few decisions on your behalf. The attorney holder’s signature will be verified before carrying out any transaction.
– The NRI investor can decide to make a resident of India his/her nominee for the mutual fund scheme.
– When you want to redeem your money, it is either directly credited in your account or paid through cheques.
– Investments made via NRE or FCNR accounts or inward remittances are fully repatriable. However, in case of investments made through NRO account, only the interest amount is repatriable not the principal.
– The tax liabilities for foreign as well as Indian investors remain the same. However, for NRI investors the tax is deduced right at the source.
These are some of the things you need to keep in mind before making an NRI investment in the Indian stock market. These are the basics of investing in Indian markets, and how you can benefit from it.