NRIs Investments

There are certainly attractive avenues in India, where NRIs obtain the freedom of investing into diversified investment portfolio and significantly build up their investment portfolio. India is emerging as being fastest growing investment destinations for NRIs.

NRIs can now invest into investment vehicles by saving into:

  • Mutual Funds: Mutual funds are known for its simplest ways of investing in increasingly complex financial markets. The reason why mutual funds are so popular is that it comes with flexibility, affordability, diversification, liquidity, low costs and regulated investor protection facilities.
  • Bank Fixed Deposits: Fixed deposit facility (FD) evolve as being the safest investment options in India as it is meant to generate stable income for an ideal investment period between 6-12 months. These facilities come in the form of FCNR, NRO and NRE deposits.
  • Real Estate: Reserve Bank has granted general permissions to financial institutions to provide housing finance loans to NRs.
  • Shares: NRIs are allowed to invest in both shares and stock. Either by directly subscribing to shares and debentures on a repatriable or non- repatriable basis and through portfolio investment scheme.

Rules for NRIs to Invest:

As per the Section 2(V) of Foreign Exchange Management Act 1999, the following three rules are applicable for NRIs who are eligible to invest in India:-

  • A person who resides outside India or has taken up employment outside India;
  • Conducting business activities outside India
  • Staying outside India for an indefinite or uncertain time period
  • A person has been in possession of his Indian passport (provided he is not a citizen of Pakistan or Bangladesh)
  • Either of his parents or grandparents were Indian citizen (as per the Indian Constitution/ Citizenship Act of 1955).




 NRI needs to open NRI/NRE (Non Resident External Rupee) account with RBI entitled Indian bank as the money will be deposited in those accounts.

 Total investment cannot cross 10% of paid-up capital in Indian company.

 An individual can open only one PIS    account for stock transaction and needs to invest in local currency.

 An NRI cannot do any trading in India without a stock broker.

 One needs to open a demat account and a trading account with a brokerage firm authorised under SEBI or a SEBI registered mutual fund advisor.

 NRIs cannot transact on non-delivery basis in India.

 A stock bought can only be sold after two days. An NRI can nominate a power of attorney who can do the transaction in India on their behalf.

 An NRI should not appoint a broker without assessing their reputation and balance sheet and check through BSE, SEBI or NSE whether he has defaulted earlier.