NRI investment options in India

*Section- II. 2(B), RBI regulations on Foreign Investment in India 

Click here to read more about NRIs investing in Indian stock markets.

You can trade in the Futures and Options (F&O) segment, but only through your NRO account, out of the rupee funds held in India, on a non-repatriable basis (subject to the limits prescribed by Securities and Exchange Board of India (SEBI) from time to time). You cannot use your NRE account to trade in the F&O segment.

You are restricted from trading in currency derivatives and commodities. Additionally, you are also restricted from engaging in intraday trading**, which involves buying and selling stocks on the same day without taking ownership.

You should contact your bank or broker for more information.

**As per the National Stock Exchange (NSE)

Open ICICI Direct NRI account

Mutual Funds (MF): You can explore equity, hybrid funds (balance of equity and debt) and debt mutual funds, like Fixed Maturity Plans (FMPs), liquid, ultra-short-term, short-term, and income funds based on your investment horizon. You can invest in MFs through either :

• Lump sum investments; or
• Regular contributions over a period of time through Systematic Investment Plans (SIPs).

You can also continue with your existing mutual fund SIPs. However, you will need to update your residency status and details of your NRE/NRO account with the Asset Management Company (AMC)/broker for any future investments/redemptions.

Please note, once your residential status changes to an NRI, you will need to do a fresh KYC altogether.

It is important to note that NRIs from the USA and Canada may face restrictions on investing in Indian mutual funds with a few AMCs which may not be Foreign Account Tax Compliance Act (FATCA) or Common Reporting Standard (CRS) compliant.  

Fixed income and debt instruments

NRIs can invest in multiple fixed income instruments including Fixed Deposits (FDs), Government Securities (G-Secs), Public Sector Undertaking (PSU) and infrastructure bonds, corporate bonds and Non-Convertible Debentures (NCDs).

• Fixed Deposits: NRIs can make Foreign Currency Non-Resident Bank (FCNR (B)) deposits that lets you maintain a fixed deposit in India in freely convertible foreign currencies for a tenure ranging from one to five years. NRIs can also open NRE/NRO fixed deposits using their NRE/NRO savings accounts respectively.

  For more details on NRE, NRO and FCNR(B) accounts, click here.

• Government securities (G-secs) and related instruments: You can leverage RBI’s retail direct account to invest in multiple G-Sec instruments and State Development Loans (SDLs). You can also explore Bharat bonds which is an ETF focused on investing in the bonds of public sector companies.
• PSU and infrastructure bonds: NRIs seeking stable returns and tax benefits can invest in PSU bonds and infrastructure bonds. PSU bonds are issued by companies in which the Indian government holds a majority stake g., National Thermal Power Corporation (NTPC), Power Finance Corporation (PFC), while infrastructure bonds e.g., National Highways Authority of India (NHAI), Infrastructure Finance Corporation of India (IFCI) are used to finance infrastructure projects.
• Corporate bonds and NCDs: You can invest in corporate bonds and NCDs (debt instruments that cannot be converted into equity shares), issued by private sector companies (such as ICICI Bank).

NRIs can also invest in Public Provident Funds (PPF), National Savings Certificate (NSC) and National Pension System (NPS), with some restrictions. However, investments in RBI Bonds are prohibited for NRIs.

• Public Provident Fund: As an NRI, you can continue to hold your existing investments and make fresh contributions till the period of maturity. However, you can neither open a new account, nor extend your existing PPF account.

  Click here to read more about PPF investments for NRIs.

• National Pension Scheme (NPS): NRIs aged between 18 to 70 years can open a new NPS account and can invest in NPS. You can open or make fresh investments only in NPS Tier I and not in Tier II accounts.
• National Saving Certificate (NSC) and Post Office schemes: NRIs are not permitted to initiate new investments in National Savings Certificates (NSCs) or other post office schemes, they can continue to hold and manage existing investments until their maturity dates. However, these accounts cannot be extended or further invested in beyond their maturity dates.

Real estate

NRIs are allowed to invest in residential and commercial properties in India, but are not permitted to invest in agricultural land, plantation properties, or farmhouses. You can also appoint a PoA to execute these transactions. Click here to know more on investing in real estate as an NRI.
 

Gold investments

You can invest in gold ETFs, gold mutual funds, digital gold, and physical gold. As per RBI and the prevailing Foreign Exchange Management Act (FEMA) guidelines, you are not allowed to make any new investments in Sovereign Gold Bonds (SGBs)*. However, if you had invested in SGBs as a resident Indian, you are permitted to hold them up to their maturity or opt for an early redemption. Click here to know more on investing in gold as an NRI.

*As per the Reserve Bank of India

Alternative Investment Funds

AIFs are investment funds that allows investors to invest in hedge funds, private equity, venture capital, and other categories. There are three categories of AIFs you can invest in***:

• Category I: These funds invest in start-ups/early-stage ventures, Small and Medium Enterprises (SMEs), infrastructure, and other areas specified by SEBI.
• Category II: These funds invest in equity, debt, and distressed assets.
• Category III: These funds use high-risk trading strategies.

To invest in AIFs, NRIs should make a minimum investment of ₹1 crore. In case you are an investor who is an employee or director of the AIF or; manager, you can make an investment starting ₹25 lakh***. Please connect with your investment advisor or your bank for more details.

***As per SEBI guidelines

Portfolio Management Services

PMS are specialised investment services offered to investors who seek professional management of their funds. Leading banks like ICICI Bank offer Portfolio Management Services in India to cater to the bespoke needs of NRIs. Under PMS, a dedicated portfolio manager constructs and manages a portfolio based on the specific need of the individual NRI taking into account their financial goals, risk tolerance, and investment horizon. As per the SEBI guidelines, there is a minimum investment of ₹50 lakh to open a PMS account.

Opening a PMS account in India as an NRI

You can open a PMS account with SEBI-registered portfolio manager and invest using your NRO/NRE bank account. To begin with, you would need to fulfil the Know Your Customer (KYC) norms and submit the requisite documentation, including your passport, visa, address proof, and a PAN card.

Typically, PMS would involve investments in the Indian secondary stock market. To make such investments, you will need a PINS account with a designated bank branch.

Please note that you will also need to hold:

• A trading account for buying and selling securities, and
• A demat account to hold your purchased shares/securities

You would also need to sign a discretionary or non-discretionary management agreement (as per the type of PMS you want to avail). Once your documents are verified, the PMS provider will notify you for the account activation and assign you dedicated portfolio manager.

Guidelines for investing in India as an NRI

Before you start investing in India as an NRI, you should comply with the prevailing FEMA guidelines including:

• You should be classified as an NRI and have a Permanent Account Number (PAN) card
• To invest in stocks and convertible debentures, you will need to have a demat and trading account with a registered broker or bank under PINS
• For mutual funds, you can start investing with your NRE/NRO accounts either through your bank, broker, or AMCs

You will also need an NRO or an NRE bank account to make investments. You can choose to invest in India either on a repatriable or non-repatriable basis.