Over the years the opportunities to invest for Non Resident Indians (NRIs) in safe investment options has increased tremendously.
Today, a bank NRE Bank fixed deposit can fetch you as much as 8.5 per cent after the RBI delinked the same from LIBOR.
Non Resident Indians (NRIs) can today invest even in company fixed deposits under certain conditions according to Reserve Bank of India. This opens up a plethora of safe investment options for NRIs. Here are a few instruments that NRIs could consider.
Fixed Deposit of Mahindra Finance
Non Resident Indians (NRIs) can consider the fixed deposit of Mahindra Finance. This is because the interest rate is way higher than that of NRE Bank deposits. Though one must remember that interest on NRE Deposits is tax free, while that may not be the case with Mahindra Finance.
So, if your tax liability is below the threshold limit of Rs 2.5 lakhs, you may well consider this deposit. The interest rate on 36, 48 and 60 months is 9.25 per cent. This is way above the interest rates offered by banks.
But, as mentioned earlier there would be a tax liability on these deposits, unlike other NRE bank deposits.
These deposits can be considered best safe investment plan for an NRI simply because the deposits come from the Mahindra group and hence have a strong pedigree.
The deposits are also highly rated. It's important to remember for NRIs that there maybe some additional documentation that maybe required. These include a passport photocopy with valid visa, overseas employment letter, PAN Card and a local address proof.
NRE Fixed Deposits
This is perhaps the best safe investment option for NRIs. Over the years, Interest rate on NRE fixed deposits have been freed helping NRIs get much higher interest rates. Earlier, these rates were linked to the London Interbank Offer Rate or LIBOR.
There are various fixed deposits that can be considered. SBI NRE Fixed Deposits currently offering an interest rate of 8 per cent across tenures.
One must remember certain things with regards to NRE fixed deposits. No interest is payable if the funds are withdrawn within one year.
A host of other public sector banks offer interest rates ranging from 7.7 per cent to 8.5 per cent.
NRIs can also consider some mutual fund schemes. Some of the largest and the best rated include the likes of HDFC Equity, SBI Blue Chip Fund etc. However, do remember that these are not necessarily the safest investment options. However, they have in the past given returns that are far superior to bank deposits.
Mutual funds tend to be slightly risky investment as compared to some of the other instruments that are mentioned above.
There are a host of other places where NRIs can invest in, including real estate. Take a pick as these days the norms are much more liberalised then they were before.