Can NRIs invest in company deposits in India?

Non Banking Financial Companies (NBFCs) can accept deposits from Non Resident Indians (NRIs) under some conditions such as the deposits should be debited from the Non Resident Ordinary (NRO) account of the NRI. Deposit from NRIs are also accepted on the condition that the principal and interest amount would not be credited to a Non Resident External (NRE) account. The amounts received from the deposits are also on non repatriable.

Find out the differences between NRE and NRO account here.

Apart from the above mentioned conditions NBFCs cannot accept deposits from NRIs. However, the already existing NRI deposits can be renewed.

Click here to find what are the different types of NBFCs.

While keeping deposits with an NBFC, you must check the rating of the NBFC. It is because an unrated NBFC cannot accept deposits. An NBFC may get itself rated from rating agencies such as CRISIL, CARE, ICRA, FITCH, Ratings India Pvt Ltd and Brickwork Ratings India Pvt Ltd. If the rating of an NBFC is downgraded below the minimum investment grading rating then it can no more accept deposits.

Points to remember before making NBFC deposits

1. Public deposits are not secured.

2. Depositors should take deposit receipts which are duly signed and stamped by an officer authorised by the company on its behalf.

3. The deposit receipt must contain all the details including name of the depositor, date of deposit, deposited amount in words and figures, rate of interest payable, date of maturity and the maturity amount.

4. Deposit insurance is not available to the depositors in NBFCs.

5. The Reserve Bank of India (RBI) is not responsible and does not guarantee on how financially sound a company is at present or any for the correctness of any statements or representations made or opinions expressed by the company and / for repayment of deposits / discharge of the liabilities of the company.

Conclusion

While making deposits you must check the conditions mentioned above as well as the rating of the company. NRIs should note the select restrictions that are placed with regards to payment from NRO accounts and not NRE accounts.

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