Zerodha’s Nithin Kamath bats for streamlining of regulations on NRI investments in India. Details here
Nithin Kamath proposed on social media the idea of extending online onboarding to NRIs seeking to invest in India. Given that online onboarding has significantly boosted retail participation in the Indian markets, Kamath believes it could similarly enhance NRI investments.
Non-resident Indians (NRIs) frequently express frustration with the challenges they face when attempting to invest in their home country, citing obstacles such as the intricate account opening procedures, notarization requirements, and the associated international courier expenses.
PIS Route: The PIS route stands out as a more flexible and widely preferred choice for NRIs. It grants NRIs the ability to invest in a broader spectrum of Indian securities, encompassing stocks, bonds, mutual funds, and real estate. Additionally, NRIs can leverage both NRE and NRO bank accounts when investing through the PIS route.
Non-PIS Route: The non-PIS route proves to be a more constrained choice for NRIs. It confines NRIs to invest in a restricted set of Indian securities, namely stocks and mutual funds. Moreover, NRIs can exclusively utilize NRO bank accounts for investments through the non-PIS route.
Kamath rued on LinkedIn, “Hopefully, NRI onboarding will become easier. Apart from helping build on the India story globally, it can also help the rupee" while sharing his concern on X, “NRIs are among the wealthiest outside India. We need to make it easy for them to invest back home."
Excess foreign control is a concern
The limitations on shareholding imposed on NRIs within foreign portfolio investors (FPIs) have raised apprehensions among numerous investors. These constraints, capping an individual NRI's maximum shareholding at 25 per cent and restricting the overall NRI shareholding to 49 per cent, aim to safeguard Indian companies from excessive foreign influence. Nevertheless, they have faced criticism for potentially dissuading NRI investments in the Indian stock market.
The rigorous regulations dissuade NRIs from making any investments in India. Calls have emerged in recent years urging the Indian government to ease the shareholding restrictions imposed on NRIs in FPIs. However, concerns persist about the potential implications of relaxing these restrictions.
The Indian government must meticulously assess the advantages and disadvantages of easing the shareholding restrictions for NRIs in FPIs. While there is a compelling argument for implementing certain modifications, the government must proceed cautiously to avoid compromising the country’s economic interests.
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