|Start: 2020-09-08||End: 2020-11-30|
Real estate has always remained a popular source of investment amongst the NRI crowd of investors. Owing to the government’s various reformatory measures such as RERA, GST, Benami Bill, India’s real estate market is certainly looking up. The improved transparency in real estate dealings has undoubtedly stoked the interest of the Non-Resident Indian (NRI) community.
Also, with the rupee being on the lower end of the exchange rates, NRIs stand to gain profitable returns on their Indian real estate investments. The dollar being in a much stronger position than the rupee, NRI’s are looking to invest in luxury residential and commercial real estate (CRE) properties as these are capital rich investments.
But, the specifications of Commercial Real Estate Investments are somewhat different for an Indian citizen and an NRI investor. Understanding NRI Investment in India and its underlying mechanics is essential before going through with any investment.
Before diving deep into the NRI real estate investments, it is imperative to be aware of the basic terms routinely used in the market.
A fundamental difference between real estate investing and other types of investments is that under a real estate investment, the real estate property is an asset in itself, which shows a value-added appreciation with time. Thus, not only does it provide income on the lease, but it also generates capital as the property value increases. Even a 5% capital appreciation can make the total yield jump to about 15% of the initial cost. This does not happen in any other investment, which is why real estate investing has an upper hand over the other kinds of investments.
Real estate buildings are on the top tier of assets that generate the most capital appreciation, where the gains on the investment increase over time. This also follows an upward trajectory for the property value. Capital appreciation depends on factors like macroeconomics influencing the market, interest rates, property location, or overall economic trends. The investor should keep these in mind while deciding whether to invest in a property or not.
Every investor plans out his purchase according to the financial health of the individual. Thus, it is vital to make sure that the property where the individual is investing shares compatibility with the finance and expenses.
This can be done by setting up a financial budget by the investor and then selecting those CRE properties that fit into the said budget goal. Another point to keep in mind here is the property’s location and state because it determines the type of returns it would fetch the investor. Hence, a thorough study of the area and infrastructure of the property is mandatory before investing. The investor should also bear in mind the trends of market rent that are prevalent at the time of investment. There may often be a stark difference between the rent rate displayed by the current owner at the time of investment and the rent rate available in other properties of the RE market. Naturally, it would be wise to select a real estate property with lower in-place rent as it would lead to a higher long-term return.
Another concept that is being popularized currently is that of ‘affordable housing’. It refers to the process of making the property more owner-friendly, especially targeting it towards those renters who belong to a moderate to low income group. This is relevant to the investor because making the property affordable shall guarantee the investor or the tenant lower vacancy rates. The vacant property bears a risk factor for the investor as in such a case, the investments exceed the gains causing the investor an inevitable debt.
Investing in the measures of making a property ‘affordable’ provides a dual benefit of profit-making and marketing, and this is why attention should be paid as even the minute details can lead to good returns.
This one is a gift for NRI investments. As the Indian currency has lower power than developed countries’ currencies, an investment made here shall cost a lot less in the same area than other parts of the world. This is why many large-scale investors prefer to choose India due to the cheaper real-estate rates and lower market rent, where they can generate profits by investing a generic amount.
This is a significant point of difference between the citizens and NRIs while making real estate investments as NRIs have to watch out for taxation rules and regulations. While NRIs have to follow the same taxation rules as those of the Indian citizens regarding investment gains and rental incomes, the NRIs have to go through the tax deductions while selling their property in India. These tax deductions may go up to 1% of CRE property’s value when the value is over Rs.50 Lakhs. NRIs’ capital gains over real estate property are taxable, with the TDS going to a maximum of 30% rate.
NRIs who plan to invest in Indian properties must first acquire knowledge about taxations imposed on the property.
It is common to ponder the pros and cons of any action before deciding whether it will be beneficial to go through with it. Naturally, NRIs who consider investing in Indian Real Estate also have to know the answer to what good could come from investing in Indian Real Estate.
Here are some of the reasons to help one understand the benefits of investing in India.
The common thought in every NRI’s mind is ‘where to invest?’ The types of properties available to invest in India, along with the best locations for the different types of properties, and the status of the CRE market in different regions in India are as follows:
Land and property distribution in India can be grouped into four categories:
Commercial Real Estate comprises properties that are bought for the sole purpose of professional work. The CRE sector consists of four pillars the industrial, retail, office, and multifamily. This sector is one of the fastest-growing sectors when it comes to investment pooling. Nowadays, as commercialization and urbanization have hit most parts of the country, especially metropolitan cities, the investment potential of CRE has increased immensely. NRIs also prefer this real estate property for investment where the individuals mostly looking to expand their business ventures.
The next category of real-estate is the residential type, where the properties are bought for residential purposes. Such type of properties is popular among NRI investors who are looking for capital enhancement and asset generation that can be utilized once they return to India from their job abroad. These properties are also raised on rent, where the owner earns a steady income through deposits made by the tenant. A large-scale NRI investor does not prefer such real estate investments because the profit margin is lower, and maintenance cost is high compared to CRE.
As per the rules of the Foreign Exchange Management Act, 1999, NRIs are exempted from purchasing agricultural lands in India. If an NRI wishes to procure agricultural land in India, they have to follow a separate request procedure with the RBI, where there is still uncertainty of successful purchase.
As is the case with agricultural lands, NRIs are ineligible to procure Farmhouse or Plantation property. However, certain exceptions are up for consideration, such as when the individual receives possession of the property as an inheritance, in which case it can be requested as property investment.
CRE market is popular in the major metropolitan cities, and the investor should study and compare market rates and profitability of various areas.
Perhaps the most developed CRE market in India, Bangalore, brims with investment opportunities. The city is the IT hub with grand technological corporations settling in the heart of the city. Owing to this, the current status of the Bangalore CRE market has a high demand for more office space as newer corporations are setting up their business ventures. Hence, the CRE office sector would be a good investment to make. Rental returns in Bangalore’s office spaces can go up to 10% per year. The city has caught the eye of several NRI investors, out of which the majority belong to the UAE region. The industrial sector of the city is on the rise and can also be considered a potential investment. Bangalore offers INR 5,100 per sq. ft. rate on the properties.
This city ranks No.1 when it comes to the CRE growth trajectory over the years. While most NRI investors only consider Bangalore as a Southern CRE market, Hyderabad real estate also offers some of the high returning investments of all time. So much so that the principle rates and cost of the CRE property here have shown an upwards gradation of 14%. This is only during the fourth quarter of the last financial year. The other cities have nothing of this sort. The city is touted as India’s pharmaceutical capital and hence holds a great share of the country’s industrial CRE property sector. The uniqueness of the city doesn’t stop here. Hyderabad offers a spacious and multi-faceted land distribution, which is enticing for NRI investors as these properties are a good source of long-term financial gains. As the city is still spreading its wings in the CRE market, there are a plethora of property options at nominal rates and good plot sizing. The average cost of the area in Hyderabad is INR 4,900 per sq. ft. which is much lower in comparison to other cities.
No NRI real-estate discussion will be complete without the mention of this city. Mumbai is the apple of the NRI investor’s eye when it comes to high-yielding investment planning. Despite having high prices over properties, the city is a popular investment option among NRIs (particularly from the United States) as it is the country’s financial hub. All large-scale businesses are present here, and thus, the returns on the investments in properties are promising. One downside of the city is the deficiency of space or land area. That is why the competition is fierce amongst investors. The wealth capital of India offers a land cost of about INR 9,200 per sq. ft. The pricing is subject to change depending on the property’s location.
This city is another up and coming CRE hub with a growth rate of 7% in the rental housing sectors. The city is a popular destination for educational purposes, and hence, the maximum growth has been witnessed in residential real estate. But, the quiet and peaceful vibe of the city has attracted many to make a detour from the hustle of big cities like Delhi, Mumbai, or Bengaluru and drift towards Pune. The city offers a good combination of work environment and peace. The city has also seen a rise in the population of younger working professionals who live on rent. The residential real estate would prove to be a better choice of investment in the case of Pune city. The cost of land here is INR 4,800 per sq. ft. which is much more affordable than big city pricing.
Another benefactor of the growing industrialization in India, the city of Chennai brims with real estate opportunities. A unique trait of the real estate market here is that there is a great blend of residential as well as commercial real estate. This is due to the migration of several IT and corporate professionals to the city for employment and business development opportunities. Similar to this, there has been a boom in office spaces and industrial setups. The CRE hotspots in the city include Avadi, Ambattur, Mambakkam, Korattur, and Mogappair. The RE properties are available in Chennai span over Rs.4,378-Rs.4,845 per sq. ft. The market here is price-sensitive but promising over a long-term outlook.
Moving further, a wide range of investment companies offer investment plans specially designed for NRI investors. They pay attention to an NRI’s needs and the differences present in the investment scenario of a citizen and an NRI. Remember that these investment companies have to abide by the rules and regulations of FDI policy.
NRIs can choose to make investments in real estate employing a private limited company. This includes options like:
This is another investment medium for NRIs where the investor can help contribute to the capital via partnership firm. The investor is allowed only when they fulfill the following pre-requisites:
The investment in Limited Liability Partnerships or LLPs was recently made available to NRI investors with the motive of increasing foreign investments. The investor can enjoy a 100% allowance of FDI in LLPs investments. However, there are certain rules for the NRI investor to adhere to. LLPs can further conjoin the investments into bigger LLP and acquire cumulative returns. The NRI investor can also recruit certain foreign institutions to invest in LLPs. In this case, the NRI investor or the foreign partner shall be recruited as Designated Partner (as per the Limited Liability Partnership act, 2008).
There is now an emerging trend where NRI investors have now started investing in the small-scale industrial sector. NRIs are allowed to do so, provided the investment is limited up to around 24% of the paid capital. If an NRI investor wishes to invest more than the limit, then the small-scale industry would have to:
NRI investors are allowed to invest in most of the SSIs except for the prohibited sectors.
There are a certain set of rules and regulations that have been laid out by the FEMA for NRI investors. Investors from outside India must keep a check on these rules and abide by them as they affect the investment procedures. Failure to follow these rules may lead to disqualification of investment.
These rules affirm that the NRI investor has to make investments abiding by the Indian payment forms. This can either be done through the NRE or NRO accounts, as well as through investments in other companies. The rules also state the payable taxes upon the property sale and generation of the long-term as well as short-term capital gains. The guidelines of the payment rules are:
These rules are specifically designed to manage the NRI investments and ensure that there are no fraudulent investment practices, and the NRI investors are making systematic investments. The FEMA rules are as follows:
The documents required to make investments in India are
The repatriation of NRI investments signifies that the sale proceedings or rental income made over investment are eligible for use outside of India after the application of certain taxes.
NRI investors can select investment on the repatriable basis if they wish to repatriate the proceedings directly outside of India.
An NRI real estate investment on a non-repatriable basis signifies that the NRI investor cannot take the proceedings from investments outside of India. The investment on a Non-repatriable basis is more beneficial as the profits earned from an investment do not have to suffer tax impositions. Also, these investments can be saved as domestic investments, extending their limit of returns and operation.
Out of all the investment options available to a citizen, there are some sectors into which the NRIs cannot make contributions. These sectors are:
The share transfer can also be weighed on the repatriation and non-repatriation basis.
Now, as we know the details of NRI real estate investments, it is the correct time to summarize what we’ve learned so far and draw the pros and cons of NRI real estate investing.
There has been ambiguity regarding the taxes imposed on the sale of a property by NRIs as the rules surrounding the procedure are different for a citizen and NRI.
For an NRI selling his/her property in India, the major portion of the taxes payable come from the gains or the capital gains. These taxes have a different rate depending on whether the capital gains are made over the short-term or long-term.
NRIs also have to pay tax charges in case the property is a part of the inheritance. Hence, the individual should pay attention to the details of the capital gains and other impossible taxes. The common taxes which an NRI is liable to pay are listed below:
Depending on the capital gains, the taxes on short-term capital gains are charged when the NRI is selling the property within 1-2 years of its purchase, and this type of tax is calculated by removing the cost of acquisition from the sale proceedings on the property.
Long-term capital gains are charged at the rate of 20% as TDS payable. The taxes are also variable on the slab rates provided by the income tax department.
When an NRI sells his/her property in India, the TDS depends on the tenure between the property’s purchase and sale. If the tenure is under 2 years, the NRI is charged with a 30% rate of TDS, and when the sale is made beyond that tenor, then TDS is imposed at the rate of 20%.
The state of taxes imposed is not all bad for NRI investors. They can cut down the expenses on taxes by gaining some tax benefits. These tax benefits function as exemptions that can be claimed only over those property sales made over the long-term. Thus, NRIs can enjoy tax benefits on long-term capital gains. These tax exemptions are described below:
This tax exemption helps provide relief on long-term capital gains. This can be utilized during the next purchase of the property and for any reconstruction or renovation. It is mandated that an individual can utilize this exemption to purchase only a single property, and the property has to be in the country. If, however, an NRI is unable to purchase a new property by the time of filing the income tax return, the capital gains can be submitted into a Public Sector Undertaking or any other banks and can be utilized later to get tax exemptions.
This type of tax exemption allows savings on tax expenses for an NRI when the individual invests the long-term capital gain into a bond or any other investment instrument with a fixed tenure of operation. NRIs can choose between the NHAI or REC offered bonds and redeem these investments within 5 years of the investment or selling the property. An important point to note here is that the tax exemption is applicable only when NRI invests before the income tax return filing date arrives.
This tax exemption option is for those NRIs who have earned some long-term capital gains on real estate properties other than residential ones. The benefit can be availed when the NRI invests in the purchase of a residential property using these long-term capital gains. The property must be situated in India, and the NRI must purchase the new household property within 3 years of generating long-term capital gains. The tax exemption shall be applied only on the capital gains receipt and not the other investments. The tax benefits are proportional to the capital gains, which are a part of the sale receipt included under the income tax returns.
The knowledge and awareness of the tax benefits are vital as it can save the NRI from bearing any costs of taxes, which can otherwise be avoided. Tax exemptions are an easy and convenient way for the NRI to save some tax expenses.
The NRI real estate investment has been made easy as all the procedures can be done online. The following section shall describe the method of NRI real estate investment using Assetmonk.
Assetmonk provides a quality investment platform to the individuals where they can find high return generating real estate properties to invest in. It brings a unique approach towards online real estate investments. One can find a blend of valuable assets, investment return tracking, digital security and an all-inclusive
The online investing website is a hub for NRI real estate investments as it simplifies the RE investment procedures by giving quality real estate asset options spread across the country at economically reasonable prices. This saves the NRIs some time from the otherwise hectic investment procedure and the mindless search for a real estate property in India. They can start their investment journey within a matter of few clicks.
The real-estate purchase and investment process at Assetmonk consists of just 3 steps:
As a smart investment goes a long way, Assetmonk guides the NRIs towards smarter investments and brings them to their doorsteps.
The NRI investor can enjoy high returns when they choose to invest with Assetmonk. Real estate investments generate returns in three ways:
NRI investors need to have a long-term investment perspective as it provides the following advantages:
The long-term investments help in compensating the initial cost of investment, which is not possible with a short-term investment.
Long-term investments also provide a higher margin of returns with higher interest rates.
Here at Assetmonk, we try to make the investment process easier and convenient for the investor. We provide high-yielding assets to the investor from all over the country. The investor can rely on us to make smarter investments and maximize profits.
Assetmonk realizes the importance of an investment for the investor, and we make sure that no hard-earned money goes to waste, and the investor bears the loss. Assetmonk is the guide from discovering the assets up to generating the income. It brings profitable assets to the investor’s doorstep.
Assetmonk also provides the investor with suggested product solutions that help in the profits of investments. When it comes to real estate investments, Assetmonk is surely the way to go!
The advantages of investing with Assetmonk include:
Considering the investors’ diverse needs, Assetmonk has designed three unique real estate investment plans that cater to the different needs of investors.
|Investment period||Long term||Short term||Long term|
|Who should invest?||Investors looking for long-term investment.||Ideal for growth seeking investors||Ideal for investors with passive form of income|
|Type of ownership||Either individual or full unit||Collective or fractioned||Either individual or full unit|
|Type of investment exit||Sale of unit||Sale of shares||Sale of unit|
|Investment holding period||NA||2-4 years||NA|
|Internal rate of return for investment||17.8%-21.2%||16.5%-19.1%||15.6%-18.4%|
|Type of tenant||NA||NA||Long term|
|Strategy||Property backed investment||Ownership is divided into fractions to mitigate risks||Passive income based investments supported by property|
There are many investment opportunities available for NRIs in India. Investors can choose that investment, which caters to their end goals and financial strategies.
The best options for NRI investments in India include:
This is perhaps the most popular investment option for NRIs. With low risk and high profitability margins, real estate has quickly become an appealing investment option for people living outside India.
Commercial and residential real estate has seen an upward trajectory in the country where the people, especially NRIs, have invested in purchasing or leasing properties to gain more returns and accomplish their long-term investment goals.
NRIs can choose to invest in any type of property except the country’s agricultural sector or plantations sector. There are also some added rules and regulations regarding the procedure of property purchase and selling, which are to be kept in mind while investing. Most of the NRIs look to invest in metropolitan areas and big cities because they can fetch a larger yield and more profits over an investment.
A fixed deposit bank account is the most basic form of an investment plan. It is more beneficial for NRIs who have a moderate income and have just started investment planning.
A Fixed Deposit or an FD is essentially a savings account where one can make timely deposits and then receive the cumulative amount after a fixed duration, which is called the account’s maturity period. FDs do not allow any cash withdrawals until the account has reached maturity.
For NRI investors, there are three options for opening a fixed deposit account:
Mutual Funds are the most common form of investment where the individual deposits money as an investment into different funds and reaps the returns. This is a much more professional form of investment as mutual funds are handled by banks or private professionals to buy securities from the invested money.
Depending on the type of fund chosen by the investor, mutual funds can be both high risk and low-risk investments, for example, a debt type mutual fund is a low-risk investment option where a large-cap mutual fund is a high-risk investment.
NRIs can follow the account procedures, which are the same as those of an FD, and can choose the type of fund they want to invest in.
The most popular mutual fund investment options include ICICI, SBI, Birla Sun life, UTI, PPFAS, and DHFL mutual funds.
A variant of a mutual fund investment is the investment in equity funds where the individual invests in the share market. This type of investment option is riskier than other investments as here the investment is more vulnerable to fluctuations in the market.
NRIs who choose to invest in equity funds can do so via NRE or NRO accounts as the equity funds incorporate Portfolio Investment Scheme (PIS).
In case an NRI individual is looking for an investment option other than mutual funds, bonds are a great option. These investments offer a better return rate than FD and are also appreciable over a long-term basis. There are two types of bonds available viz the perpetual bonds and public sector undertaking bonds.
NCD and bonds come in handy during times of economic crisis and financial emergencies. Such investments also are made through NRE and NRO bank accounts.
Government securities function like the bonds where NRIs can deposit in bonds issued by the government termed as ‘securities’ and receive investment returns upon maturity. Examples include fixed-rate government bonds, floating-rate bonds, or capital index bonds, etc.
These bonds bear the minimum risk to the investor, and NRIs can generate returns by selling these securities. Recently there have been developments of more mature government securities by banks such as RBI, where NRIs can invest in government securities through a different medium altogether.
CDs are a short-term investment option ranging from a period of 7 days to a year. Such investments are better suited to retail owners and may not be enticing for other NRIs as these investments require a principal amount and have a fixed set of returns.
Such an investment plan is targeted towards individuals seeking security for their retirement plans. NRIs are also eligible to invest in NPS, starting from an early age of 18 to 60.
There are two types of NPS accounts, namely 1st Tier account consisting of a general pension account that comes with withdrawal limitations and 2nd Tier account that do not impose any limitations on fund withdrawals.
The returns on an NPS are taxable along with the maturity benefits.
It is important to go through the list of documents required while completing the KYC procedure. The KYC procedure is essential when NRI tries to make a mutual fund investment.
The documents required for the KYC procedure are:
These are the documents required to be presented as evidence of the NRI’s identity. Here are the documents which are valid ID proof-
After identification proof comes the address proof for the KYC procedure. The following documents are valid as proof of residence.
KYC is an integral part of mutual fund investments. Sometimes, NRIs may wish to complete their KYC procedure or update their KYC status. They can update their KYC status by following these simple steps:
The Know Your Client or KYC procedure has recently been introduced to the world of investment in India. This procedure is carried out to ensure that only one investment plan is allotted per customer and any malpractices or fraudulent actions by the investor are prevented. In turn, this will add security to the NRIs’ investment as there is increased fair trade and no biasness. The procedure of KYC is necessary for the process of investment in mutual funds. Only after an investor is KYC verified, he/she is eligible to invest.
There are also business loans for real estate investing, which can be opted by NRIs to support their investments. Loans are functional for both residential as well as commercial real estate properties.
NRIs are also eligible to claim for a home loan in India. This has to fall in line with the guidelines provided by the Foreign Exchange Management Act, 1999. There are certain rules and regulations to be followed by NRIs while applying for a home loan. For instance, an NRI can claim for only a single home loan sanctioning at one time as they are prohibited from purchasing more than one or two residential real estates. Therefore, the NRI can request a home loan only for purposes like purchasing a new property or renovating/reconstructing the existing one.
The procedures for loan applications are somewhat similar for both NRI and a citizen applicant.
The various types of specifications for a home loan are mentioned below.
Every home loan application process comes with an eligibility criterion that the candidate, whether an NRI or a citizen, has to fulfill to avail of the loan. These eligibility criteria can be education-based, where the minimum qualifications required are a graduate degree, or the criteria can be age-related, in which case the age limits are between 18-60 years. The NRI candidate’s income also plays a role in the home loan application as it influences the amount of loan that shall be sanctioned. Some banks also differentiate the income into earnings made abroad and those made in India.
The NRI candidate is required to present the following documents while applying for a home loan in India:
The NRI candidate has to notarize all the documents through the GPA.
Tenor Period:This is the point of segregation between a citizen and an NRI as the common tenure for a home loan can go up to 30 years for a citizen, but an NRI can avail of a home loan with a maximum tenor of 15 years. The minimum tenor can be 5 years. This is because the loan payout potential of an NRI candidate is generally higher than a citizen.
Interest Rate: There are similar interest rates for both citizens and NRIs loan applicants. These can range between 10-13%.
Minimum Income Norms: The minimum income sum required for an NRI individual to be eligible for a home loan is different among the different banks depending on their loan scheme.
Tax Benefits: Home loans in India do not provide any form of tax exemptions/benefits to NRIs. However, an NRI candidate can avail of a few tax exemptions if they file for a return and possess eligibility for these benefits.
Repayment of Loan: Loan repayment is slightly different for an NRI because most of the bank mandate loan repayment in Indian National Rupee only. They do not allow installments in any other currencies. Thus, the candidate has to deposit the timely loan repayment installments through NRE or NRO accounts. Failure of loan repayment will result in the ceasing of the property by the bank.
NRIs should also note that most of the home loans require a co-applicant along with the property owner while applying for home loans in India. These co-applicants function as a guarantor for the loan that becomes vital in the absence of a property owner.
This section is concerned with the NRIs point of view during a real-estate investment.
The NRIs are required to open separate types of bank accounts to invest in real estate. The summary of the salient features of the different NRI related bank accounts is as follows:
|Feature||NRE Account||NRO Account||FCNR Account|
|Type of currency||INR||INR||Foreign currency|
|Function of the account||The account can be used by the NRI to deposit their earnings abroad in the form of Indian currency.||The account can be used by NRI to deposit their earnings made in India.||This account allows the NRI to make deposits in its original currency and utilize them for investment in India.|
|Tax||The returns from the investments are eligible for tax exemptions. That includes both principle as well as interest amount.||No tax exemptions on the return balance||Only the interests earned are eligible for tax exemptions.|
|Account type||Savings, Fixed deposits or current||Current, Savings and Fixed Deposits account||Fixed Deposit accounts|
|Facility for Joint account||Joint account can be opened in association with another NRI||This type allows opening of joint account by NRI and Indian citizen||Joint account can be opened in association with another NRI|
|Balance Repatriation||Full repatriation||Only interest rates can be repatriated completely.||Full repatriation|
|FD period||As per the bank||As per the bank||Maturity period of 1-5 years|
|Exchange rate||There is an effect of the present exchange rate on this type of account||There is no effect of exchange rate on this account||There is influence of exchange rate.|
NRI investors should also ponder upon the hedging associated with currency risks. Any weakness in the rupee adversely affects the NRIs’ investment returns in foreign currency. The changing currency conversion rates might make the returns from investment volatile.
Currency risk can be hedged by making forward contracts. A forward contract is an agreement between two parties to make a transaction at a fixed price, at a specific time in the future.
Another way in which NRIs can hedge the currency risk is by trading with currency derivatives. If the foreign currency is expected to appreciate, in other words, the Rupee to weaken, then the best way to hedge is to buy the USDINR futures. On the contrary, if the NRI is expecting the foreign currency to weaken or the Rupee to strengthen, then the best way to hedge is to sell the USDINR futures.
Recently, SEBI has come up with rules that aim to maximize currency risk hedging. SEBI has permitted NRI investors to make over-the-counter transactions to avoid losses associated with currency risks. It has allowed NRIs to access the ETCD (Exchange Traded Currency Derivatives).
RBI has also reformulated the laws and regulations to help NRI investors hedge currency risks. These new rules are set to be incorporated as amendments in FEMA, 1999.
Under the guidelines recommended by FEMA the NRIs are eligible to invest in real estate property in India. These properties do not include agricultural or farm land.
The documents that NRIs are required to present include: 1. Copy of Passport 2. Copy of Visa 3. PAN card 4. Identity proof 5. Proof of Address 6. PIO card
Yes, NRIs can invest in REITs as per FEMA guidelines. These investments generate returns in the form of rental income and gains.
NRI real estate investment involves the purchase of real estate property in India, either residential or commercial and use this property as a prospective future source for wealth creation.
Yes, the NRI bank account facilities offered in India at present are not associated with bearing any risk factors. These accounts help in a relatively safe and secure transaction without any unfair means. These accounts are offered by a number of reliable PSUs or government authorized banks.
Yes, the RE investment seems to be a good source of asset creation for the NRIs because of the currency exchange rates, the property pricing and the overall trends of Indian RE market.
The type of bank account an NRI investor wishes to select depends on the motive of investment. The FCNR is a good option for investments where the NRI wishes to repatriate all the proceeds and if the investor wants the returns to be utilized in India, then NRE is the right choice.
Yes, the investor can withdraw money from NRE account and transfer it to the foreign bank account
FEMA has allowed the NRIs to open NRE, NRO or FCNR account to assist in their investments.
As there occurs a significant distinction in the type of currency used by NRI from the Indian currency, for an NRI to invest in India it is essential to open a bank account in the form of NRO, NRE or FCNR account. These bank accounts help in eligibility of NRIs in real estate investments.