NRIs, Here are different ways you can invest in India
Hello NRIs 👋
I’m back today with answer to the second most frequently asked question to me. If you are wondering what is the (first) most frequently asked question, read this article I wrote last week.
In this article I shared a case study where I compared returns from India and UK. The case study assumes you sent a fixed amount to your NRE account every month for five years, are able to generate a fixed rate of return each year and after the fifth year you start remitting your investments and gains to UK using the prevailing exchange rate. This way the gains were subjected to INR to GBP exchange loss. And we discovered that a mere 4% difference in growth rate makes investing in India more beneficial than investing in the UK.
So, if you are all set to make your first NRI investment in India, this article lists down all the next steps you need to take.
First of all, you will need an NRE account with a reputed bank like HDFC, Kotak or ICICI. There are a lot of other Indian banks offering NRI services but in my opinion these banks have well established practices and customer support so it’s much easier to follow through. In terms of customer support and communication, I found Kotak Bank to be the best among these three.
Opening an NRE account is fairly easy and can be done without visiting India. Here’s a list of documents you will need —
- ID proof (passport, Adhar card, other acceptable proofs)
- PAN card
- Residence permit or valid visa (to prove you are an NRI)
- A proof of foreign address (utility bill, bank statement, driving license, other acceptable documents)
You will need to get these documents (except PAN card) certified. This can be easily done from your local post office for a fees of £12.75 (at the time of writing this article). There are other ways to get the documents certified, but I found the post office one to be cost effective and quick. Don’t forget to carry originals of all these documents as the post office personnel will need to see them.
Top tip: Make sure you fit your passport’s first and last page on single A4 paper, Residence permit back and front side on another A4 paper and UK address proof on the third. This will save you money because add an additional page and you end up paying £12.75 plus £12.75!
Most banks offer a paid-for courier service to send these documents to the respective branch. It should not take more than fifteen days to get the account opened once the bank receives all your documents.
Once your NRE account is opened, you can do pretty much everything else online. With an NRE account opened, you can take your simple first step in investing in India which is creating an NRE FD or an FCNR deposit.
However, to invest in equities market you will need something called a Portfolio Investment Scheme (PIS) account with a bank. This will allow you to repatriate freely your gains from such investments done though PIS. A PIS letter/account can be obtained after completing KYC and is offered as part of opening a demat and trading account. Many banks offer a 3-in-1 trading and demat account for NRIs and the process is straightforward.
Once you obtain an NRE trading + demat account and a PIS account you are all set to invest in Indian Mutual Funds and Equities on a repatriable basis.
Mind well, all the gains from NRE investments are subject to tax in the UK though not in India.
So, here was your complete step-by-step guide to start investing in India in an NRE repatriable mode. By the way did I mention you can continue using your existing demat/trading account even if it’s linked to NRO account? Just be aware that NRO gains are taxed in India as well as UK.
Lastly, thanks to all my readers and supporters! If you have any questions or topics you want me to talk about dm me on Instagram @umoneyminded.
I will be back with more such insightful content next week till then happy investing!