Chapter: Business Science : Merchant Banking and Financial Services : Issue Management Introduction

Investment Potential Of NRIs

INVESTMENT POTENTIAL OF NRIs

It is estimated that currently about 25 million Indians living abroad would fall into the definition of NRI. Of these about 20 million have taken up foreign nationality (FNIOs) and the remaining 5 million are still Indian passport holders. The pattern of earning and consumption of NRIs is such that it leaves annually a fairly large amount of investable resources. Conservative estimates place such resources at Rs.45,000 crores or about US $15 billion annually and the wealth at $200 billion or Rs.7,20,000 crores. Assuming that India succeeds in persuading NRIs to invest 10 % of their total saving into investments in India, the estimate of possible inflow is about US$ 1.5 billion per year.

Avenues for Investment by NRIS

NRIs can have three different types of bank accounts, buy securities in the primary and

secondary markets, and do business on non-reparable basis as well as repara have also made in the past large investments in specific bonds, i.e., the India Development Bond in 1991, the Resurgent India Bond in 1998 and India Millennium Deposits in 2000.

Foreign Direct Investment under New Industrial Policy (1991) Repatriable Basis:

Under the new industrial policy, foreign direct investment up to 51% of the equity is allowed on repatriation basis in certain high priority industries. NRI’s can take up the balance 49% of equity in such cases on repatriation basis.

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Business Science : Merchant Banking and Financial Services : Issue Management Introduction : Investment Potential Of NRIs |