Non-resident Indians (NRIs), persons of Indian origin (PIO) and overseas citizens of India (OCI) have always been fascinated by the Indian investment markets, be it for debt or equity. Although a wide range of products is offered, investment safety and aggressive returns have been the head-turner for the last few years, as individual investors have found investing in India very complicated. This is because the Indian financial system entails excessive time for processing requests, cumbersome paperwork, and requirement of physical presence, etc.
With the tech-enabled banking, secured payments and flexible country regulations, investment options in India are running smoothly. In the era of Covid-19, taking advantage of the digital space, investors can go ahead with digital documentation, including Foreign Account Tax Compliance Act (FATCA), video-based KYC, etc. NRIs make the best use of domestic country’s currency (INR) by remitting payments to receiving financial organisation’s account through two modes: NRO bank account using SWIFT wire transfer, direct transfer through non-resident external (NRE) bank account using National Electronic Fund Transfer (NEFT).
Whatever the mode is, the NRI investor gets explicit commercial advantages over an Indian resident.
With the non-resident ordinary (NRO) bank account, also known as the Indian resident bank account, the NRI investor will be severely affected in terms of investment returns in currency conversions. If uncalled taxation hits his money will get stuck in India.
The operative pattern of the Indian financial system has notably improved over the years. Most global life insurer brands from India offer products like unit-linked insurance plans (ULIPS), term life (life covers) and income & lump sum or guaranteed return through these modes of payments.
Under RBI regulations (FEMA 14(R)/2016-RB), premium amounts received from outside India via proper banking channels are valid and must be treated as ‘freely convertible foreign exchange’.
Life Insurance Council of India guidelines of June 2019 refrain from claiming good & services tax (GST) up to 18% every year on all remittances to India made via either NRO bank account using SWIFT wire transfer or direct transfer through NRE bank account.
The cost of investment acquisition is lesser when it has been made by an OCI investor. Wherein an Indian resident mandatorily pays the government levied taxes in all purchases, an OCI investor can legally bypass the same. The revised guidelines indicate that the investors could maximize their investment portfolio through diversification of investments.
But, how to accomplish that?
Well, for that:
- Get in touch with the concerned advisor and discuss financial goals and requirements
- Choose products that meet your goals (debt or equity)
- Submit all documentation digitally and process
- Pay through NRE (NEFT) or NRO (SWIFT) bank accounts directly to insurers.
If the investment provides a life insurance cover, you may have to undergo a medical test, which will be conducted in your present country of residence.