SIPs, or Systematic Investment Plans, are a type of organised financial tool that allows users to put their money in Peer to peer investments on a regular basis. When you set up a SIP with a Peer to peer investments, the invested amount is deducted every month, and the investments grow over time. While SIPs are one of the most popular investment vehicles in India, non-resident Indians (NRIs) are also permitted to invest in Peer to peer investments. Before making investments, they do not need prior approval from the RBI or any other entity. Let’s go over this in depth.
Can NRIs invest in SIPs in India?
Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs) are all eligible to participate in various SIP plans in India, just like any other Indian resident. These programs assist in making mutual fund investments more reasonable by providing two options: repatriable and non-repatriable. While mutual fund investments on a repatriable basis necessitate the opening of an NRE or FCNR bank account, non-repatriable investments necessitate the opening of an NRO or NRE/FCNR bank account.
How can NRIs Invest in Peer to peer investments through SIP in India?
NRI investors can begin investing in Peer to peer investments through SIP by following the steps below.
1. Select the most suitable peer to peer company and peer to peer SIP plan from a variety of Mutual Fund SIP equity and debt schemes available at the time.
2. The NRI must decide on the frequency of the SIP, which is commonly monthly or quarterly.
3. Establishing or selecting an NRI bank account from which the SIP amount can be electronically deducted. A Direct Debit Mandate or Electronic Clearing Service (ECS) mandate with a certain sum can also be issued. Furthermore, post-dated cheques are permitted.
How Can the NRIs Invest in SIP?
There are two primary tools that an NRI requires for proceeding with any investment in India:
- Non-Resident Original Account (NRO)
- Non-Resident External Account (NRE)
NRIs can simply invest in Indian Peer to peer investments using bank accounts, as previously mentioned in any Indian bank. So we need to gain a comprehensive understanding of the SIP investment procedure.
There are various digital platforms and wealth management firms in the industry that assist NRIs with registration and handling of KYC paperwork for an easy investment experience.
This is a smooth procedure that NRIs can use to easily fulfil the KYC (Know Your Customer) criteria for various Indian investment Schemes. This procedure comprises NRIs providing the necessary documents online, and the system verifying the information through IPV (In-Person Verification).
The following documents are necessary to proceed with the registration process:
- Completed and signed KYC form.
- Identity verification requires a passport and a PAN card (both self-attested).
- Address documentation is required for NRI verification (both correspondence and abroad address).
- Process of In-Person Verification
After the submission of the appropriate documents, the verification of the documents is an important step in the procedure. Several authorised institutions conduct In-Person Verification to ensure the authenticity of documents provided by investors. This IPV can be performed in two ways:
This approach comprises document verification, in which NRIs have to visit the nearest office, or for originality verification,some officials visit the NRIs’ workplace or home.
In modern digital existences, this is the most common technique of document verification. The IPV can be performed by video call with the appropriate agencies and entities. The video conversation comprises officials asking questions regarding the information provided on the KYC form. The application may be cancelled if officials suspect foul play or if any details are contradicted.
What are the Benefits of SIP?
Because of its rising economy and the potential for economic growth, India attracts a number of foreign investors. These investors are an important segment and play an important role in the Indian economy.
The following are some of the advantages that NRIs might gain from investing in mutual fund schemes through SIP:
SIP is one of the most convenient ways to invest in peer to peer investment schemes since it allows for flexible payments at regular intervals and flexibility during economy fluctuations.
Systematic Investment Plans (SIPs) are a more effective and dependable technique than FDs or RDs to earn higher returns amid inflation.
SIPs help you to accumulate wealth over time, and the longer you contribute to your plans, the more your wealth rises. Keep a five-year or longer investing horizon for compounding to work its magic. Furthermore, by investing in the best SIP plans for NRIs, you may end up with a fair sum for the future.
With a high lump sum investment, investors find it difficult to manage their finances and large number of units. Purchasing units at regular periods with SIP makes it simple to track and manage the finances.
Profits from Rupee Strength
If the value of the Indian rupee rises relative to the investor’s home currency, the likelihood of profit increases.
Wrapping it Up
The first phases may be unpleasant for an individual; however, the returns achieved from SIP in Peer to peer investment will outweigh the inconveniences. Make sure to conduct thorough study on SIP investing for an NRI.