Investment Guide for NRIs – Indian Debt Market

The Indian Debt Market is one of the largest in Asia and a popular investment for NRIs looking for assured returns. The debt securities, mostly in the form of bonds are important means to raise capital from investors, rather through banking channels. In the Indian Debt Market, the debt instruments carry a low risk and the returs are almost assured. The bonds traded in the debt market have a fixed return which is known as ‘Coupon Rate’ or ‘Interest Rate’. Therefore such investments in bonds are a good addition to an investment portfolio to diversify the risk that NRI may have in the Indian mututal funds or Indian equity market investments.

NRIs are eligible to invest in any intrument under the debt category provided the ‘NRI window’ is enabled during the offer by the issuer. For all practical purposes, the rules and regulations for investing are the same for NRIs and OCIs (Overseas Citizen of India). The types of bonds that NRI investor can choose are listed below:

  1. Public Sector Unit (PSU)
  2. Secure Corporate Bonds and Non-Convertible Debentures (NCDs)
  3. Government Tax-Free NRI Bonds
  4. Treasury Bonds
  5. Municipal and Zero Coupon Bonds
  6. Infrastructure Bonds

The bonds are rated by credit rating agencies like CRISIL, CARE and ICRA depending on the ability of the issuer to pay back the debt on time. The higher the credit rating, lower are the chance of the issuer defaulting on the payments.

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