Zerodha’s Nithin Kamath bats for streamlining of regulations on NRI investments in India. Details here
Non-Resident Indians (NRIs) often express frustration with the challenges they face when trying to invest in their home country, citing obstacles such as complicated account opening procedures, notarization requirements, and the international courier costs related to them.
PIS route: The PIS route stands out as a more flexible and widespread option for NRIs. It gives NRIs the ability to invest in a wider spectrum of Indian securities, which include stocks, bonds, mutual funds and real estate. In addition, NRIs can leverage NRE and NRO bank accounts while investing through the PIS route.
Non-PIS route: The non-PIS route proves to be a more restricted option for NRIs. It restricts NRIs from investing in a restricted set of Indian securities, namely stocks and mutual funds. In addition, NRIs can use NRO bank accounts exclusively for investments through the non-PIS route.
Kamath said on LinkedIn, “Hopefully it will become easier to get on board an NRI. Apart from helping boost India’s story globally, it can also help the rupee” sharing his concern on X, “NRIs are among the wealthiest people outside India. We need to make it easy for them to invest at home.”
Too much foreign control is a concern
The restrictions on shareholding imposed on NRIs within foreign portfolio investors (FPIs) have raised concerns among many investors. These restrictions, which cap the maximum shareholding of an individual NRI at 25 percent and limit total NRI shareholding to 49 percent, are intended to protect Indian companies from excessive foreign influence. However, they have faced criticism for NRI investments that may be unwise in the Indian stock market.
The strict regulations prevent NRIs from making any investments in India. There have been calls in recent years urging the Indian government to relax the shareholding restrictions imposed on NRIs in FPIs. However, there are still concerns about the implications of relaxing these restrictions.
The Indian government needs to carefully assess the pros and cons of relaxing the shareholding restrictions for NRIs in FPIs. Although there is a strong argument for the implementation of certain modifications, the government must proceed with caution to avoid interfering with the country’s economic interests.
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Updated: 17 November 2023, 09:12 AM IST
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