Being an NRI comes with certain advantages and disadvantages. Everyone knows about the perks that come with being an NRI but not many are aware of the issues or problems the community face in certain cases, especially while investing. There are some stringent rules and regulations surrounding NRI investments and NRIs are mandated by law to follow them while ploughing in their money earned abroad. So, today we will talk about a few of the problems that they face back home while investing. Let’s dive into these straight away.
The Strict Conditions Involved In MF Investments
Indian mutual funds happen to be a good investment instrument for NRIs. However, while investing in these funds in India they need to tread with caution. There are certain rules that NRIs are required to follow and no excuse is entertained in case of non-compliance on their part. These set of rules can be a bit complicated but the mutual fund houses have to fulfil certain criteria before they start getting money from Indians based abroad, so they are left with no choice other than framing stringent regulations. Hence, NRIs must be aware of the several mutual fund houses operating in India and the kind of funds they are permitted to invest in before opting to put in their hard-earned money, not to forget the set of rules and regulations.
Less Scope For Diversification
Indians based abroad usually invest in traditional arenas like real estate, gold, fixed deposits etc. But compared to Indian residents, NRIs have minimal space for diversifying their investment portfolios. The reason for the same can be attributed to tough laws, zilch knowledge about Indian markets, transactional rules etc. Due to these issues, NRIs do not venture into certain investment zones, thereby restricting the zones to park their money.
Lack Of Clarity Regarding Digital Assets
NRIs normally find digital assets, such as cryptocurrencies and non-fungible tokens (NFTs), to be attractive investment options. However, cryptos face an uncertain future in India as they are not legally acceptable in the Indian economy. And to add to the existing problem, crypto transactions also attract a high tax rate. These aspects are bound to make the NRIs averse to digital assets as in case of any problem or a hiccup, however minor it might be, there are no legal remedies to deal with such circumstances in India.
Fraudulent Realty Agents
Real estate is one of the attractive investment avenues for NRIs. But due to the ignorance regarding their legal rights and the presence of unscrupulous real estate agents in the Indian realty sector NRIs can face certain risks while investing. For instance, NRI investors facing huge losses after putting money in illegal properties due to the shenanigans of the unregistered realty brokers is quite common in the country. So, this is another problematic area that would dissuade NRIs from investing in Indian real estate altogether.
But, it must be emphasised that the Indian market is not currently what it used to be, say 10 years back. A lot of reforms were implemented to cut down risk factors and create an ideal investment climate in the country. As far as NRIs are concerned they should invest in India without any hesitation but they need to be aware of their legal rights, present market realities and deal only with certified agents. If they follow all the precautions they can reap rich rewards through their investments in India devoid of any problems.