Procedure to Start Investing

PAN Card

PAN (Permanent Account Number) the most important document for any financial transaction in India is a Permanent Account Number (PAN) which is issued by Income Tax Department of India. It is a 10 digit number (quite similar to the Social Security number in USA or National Insurance Number in UK).

Mutual Funds Investments

KYC

Once the client has a PAN, the next step is to complete the KYC. For any investments into mutual funds- a Know Your Customer (KYC) form is required to be filled for all mutual fund investments. KYC is a customer identification process. This could be in the form of verification of identity and address, financial status, occupation and such other personal information.

Repatriation Basis

Payments may be made through Indian currency cheques / Demand drafts. NRI applications can also be made by submitting payments through demand drafts purchased from FCNR bank accounts or cheques drawn on NRE accounts. All cheques / drafts should be locally payable at any of the official point of acceptance. All applications must be accompanied with a FIRC.

Non - Repatriation Basis

In case of NRIs seeking to apply for investments on a non-repatriation basis, payments shall be made by cheque / demand drafts drawn out of NRO (Non-Resident Ordinary) accounts.

Stock Market Investment

PIS

A Portfolio Investment Scheme (PINS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the 'Non Resident Indians (NRIs)' and 'Person of Indian Origin (PIOs)' can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.

DEMAT Account

To invest into Indian Stock markets, all investors are required to open a DEMAT account with a Depository Participant in India. Separate DEMAT accounts are required to be opened for repatriable and non-repatriable investments.

Brokering Account

In order to invest into stocks, every investor is required to be registered with a registered Stock broker. Under the PIS scheme, all investments in stocks can only be performed through a stock broker registered with a stock exchange.

Real Estate

The monetary transaction must be in Indian rupees (INR) and through normal banking channels using an NRI account. Lenders will be more happy to fund your purchase provided you are eligible and the property papers are clean. It will be wise to get the papers verified by a lawyer before going ahead. Make sure to check the title papers of the property, especially if it is inherited or jointly held, and take a bank release in case it was at any point of time under mortgage.

Also, take a no dues certificate from the seller at the time of purchase to ensure there is no water, electricity or any other pending bills with the authorities. For new constructions, land title should be clear and the builder should have taken all approvals and permits from the civic authorities in terms of construction. Also, education qualification and profession play a role in deciding your loan eligibility. Like, only graduate NRIs can avail home loans in India.

According to RBI norms, a maximum of 80% of the value of property can be funded by a financial institution. Rest has to come from the NRI's personal resources. Indian financial institutions give rupee loans and so the same needs to be repaid in rupees only Since all transactions must happen through the banking channel, repayment has to be done by inward remittances. You can directly get the money remitted from NRO/NRE account in India or issue post-dated cheques or Electronic Clearance Service (ECS) from your NRE, NRO or Foreign Currency Non Resident (FCNR) account.

Passing the PoA

If you are buying an under-construction property, your developer may ask for a power of attorney (PoA) favouring them. This is not unusual and would make documentation work slightly easier and quicker.

A PoA can be given to execute any contracts, deeds as well as mortgage, lease or even sell. So make sure the kind of authority you are giving to the person through the PoA. Just get it worded properly by a professional lawyer you trust.

For more information please contact us.