An Investment Guide for NRIs

An Investment Guide for NRIs

NRI and PIO, do you fit the legal definition of one? NRI is a Non-Resident Indian, a citizen of India now residing overseas. PIO is Person of Indian Origin, usually not a citizen of India, but an individual of Indian descent. According to the Government of India, anyone of Indian descent up to four generations removed is a PIO.

If you are an NRI, you will have a wealth of opportunities available for you to invest and grow your money. The one you should not overlook is the option offered by the Indian banking system. Many NRIs want to remit money to India, this is the practice of sending money earned abroad back to your home country. Remittances to India have increased from USD 2.1 billion in 1990-91 to 55.06 billion in 2009-2010.

It is now much easier to remit money to India. Earlier this was done either through electronic means or by demand draft. Today many banks offer money transfer facilities which are incredibly useful when you want to remit money to India. The NRI Bank Account is essentially an Indian account opened for an NRI. It is a wonderful tool of the Indian banking system for NRIs with banking needs in India and abroad. NRI Bank Accounts are divided into 3 further account types; NRE, NRO and FCNR. NRE and NRO are both rupee denominated accounts. The NRE receives funds from outside India and is fully repatriable while the NRO is non-repatriable and receives funds generated in India. FCNR accounts can be opened in 5 different currencies; dollars (US, Australian and Canadian), pound sterling, euro and Japanese yen.

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As an NRI, placing your money in an NRI Bank Account is a means of diversification as it allows you to maintain funds in India separate from other investments. In addition, the NRI Bank Account can serve as a means of minimizing the risk of fluctuation in currency rate by maintaining some amount in Indian rupees in case of a fall in the value of the dollar. You can compare interest rates in India and in foreign countries, and decide where investment would yield the best returns.

You can also invest your money in deposits in Indian banks. Similar to fully fledged bank accounts, these deposits can be NR(E)RA and FCNR. NR(E)RA deposits are in Indian currency while FCNR is in 5 foreign currencies as mentioned above. Thanks to the watchdog stance of the RBI (Reserve Bank of India), you can be assured your hard earned wealth will be safe in an Indian bank deposit and will suffer a negligible impact from turmoil in foreign economies. Indian banks also won’t be as reckless with your money as a foreign bank, owing to stricter regulations in India.