NRIs and NPS Investment..!
By Mr. Arnav Pandya, Certified Financial Planner
In a new development, the Reserve Bank of India
(RBI) has allowed non-resident Indians (NRIs) to subscribe to the National
Pension Scheme (NPS).
The move will increase the number of investment
options present for senior NRIs; it will also have an impact on the amount of
money that’s flowing into the NPS.
However, the NRI investors still need to mull
over a few other conditions to find out whether the new route suits their
requirements.
1. Overall boost..!
Allowing NRIs to subscribe to NPS means opening
up a new source of funds.
Now there will be a new stream from which
investments will flow into the NPS and this could increase the overall corpus of
the scheme.
The corpus is already huge as lots of compulsory
savings of government employees go into the scheme, although the amount that’s
willingly put in by other subscribers is not that big.
Hence, if the new avenue becomes successful,
there will be more funds for the NPS to manage.
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| Arnav Pandya, Certified Financial Planner |
2. Additional choice..!
NRI investors will now have an additional choice.
NPS has a very clear goal — it is meant to be a retirement planning option.
At present, in most cases, NRI investors need to
consider many factors and do a lot of planning as per their specific goals
before making an investment in India.
But, those who have a specific goal of investing
for retirement purpose would consider taking the NPS route.
3. Banking channels
It has been clearly mentioned that investment in
this scheme will be possible only through normal banking channels.
This means NRI investors can use their various
bank accounts in order to invest in NPS. At the same time, they can also ensure
that for the purpose of investment, they are transferring the amount from
abroad through inward remittances.
This, along with the non-resident external (NRE)
and FCNR account, can be used for making the investment. This gives the
investor a clear idea about how to make the investment and what are the
restrictions present on that front.
4. Overall choice..!
If an NRI investor wishes to take back the amount
he/she invested in NPS, he / she must take into account the ‘foreign exchange
risk’ factor.
This must be considered because it can change the
entire equation of the investment.
At the same time, if someone wants to plan for
his/her retirement in India, this could be a helpful route.
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