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For NRIs seeking to nurture their financial growth, a plethora of investment opportunities are available especially in India. India’s flourishing economy makes it an appealing destination for investments that align with its growth trajectory. The following diverse range of options empowers NRIs to actively participate in and benefit from India’s ongoing growth story.
Fixed Income Investments
1. NRI Fixed Deposits:
NRIs have the opportunity to invest in fixed deposits through three distinct accounts: NRE, NRO, and FCNR. It’s important to note that each of these accounts comes with its own set of benefits and drawbacks. This variety empowers NRIs to make informed decisions based on their individual preferences.
Account Type | Features |
NRE Savings Account & Fixed Deposit Account | NRE accounts are used to deposit or save foreign earnings in Indian currency. |
NRO Savings Account & Fixed Deposit Account | NRO accounts are used to manage and save Indian earnings that are made in Indian currency. |
FCNR Fixed Deposit Account | FCNR accounts can be used to deposit or save foreign currency earnings in any of the currencies that the RBI has approved. |
2. Some of the other fixed income investment options are:
Government Bonds,
Corporate Bonds,
Money market instruments,
Debt Mutual Funds,
Pension Funds etc.
Equity Solutions
1. Direct Equity
NRIs can use a Portfolio Investment Scheme (PIS) to directly invest in the Indian stock market. This RBI-regulated requirement involves opening a PIS account with an authorized bank, serving as a link for stock transactions. This enables NRIs to trade shares of Indian companies on recognized exchanges while staying compliant with regulations and reporting. Indian Equity is subdivided as follows:
Sub Category | Market Cap | Associated Risk |
Large Cap | Rs. 20,000 crores or above | Comparatively Low |
Mid Cap | Rs 5,000 crore and less than Rs 20,000 | Medium |
Small Cap | Below Rs 5,000 crore | High |
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2. Mutual Funds
A mutual fund is like a big pot where many people put their money together. This money is used to buy different things like stocks and bonds. This helps people who don’t want to pick individual stocks or bonds, but still want their money to grow. Mutual funds are of various types:
Structure of Mutual Funds
Open-ended funds | These funds allow buying or selling units anytime. |
Close-ended funds | These funds cab be bought and sold during a specific period only. |
Asset Classes
Equity funds | Large-Cap, Mid-Cap, Small-Cap company shares etc. |
Hybrid funds | Invest in both debt and equity. |
Solution-oriented funds | For specific goals like education or retirement. |
Other funds | Index funds, Fund of funds etc. |
Investment Goals
Tax-saving Funds (ELSS) | Invest in company securities, eligible for tax deductions. |
Capital protection funds | Partly invest in fixed income, partly in equities. |
Growth funds | Invest in high-performing stocks for capital appreciation. |
Liquidity-based funds | Ultra-short-term and liquid funds, are ideal for short-term goals. |
Learn more about other Investment Avenues in Part -2
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