NRI bonds are government securities in the form of bonds issued by the Reserve Bank of India (RBI) to non-resident Indians (NRIs) who want to invest their money in India. These bonds are available to NRIs through a separate route known as the "Fully Accessible Route". NRIs invest in these bonds for different purposes, such as creating a financial backup for their families, having good returns, and diversifying their global portfolio of investment.
Features and benefits of NRI bonds include:
- Types of bonds: NRIs have options to invest in 5 years, 10 years, and 30-year bonds from FY 20-21. The RBI has the authority to issue new guidelines from time to time. NRIs can consider investing in government bonds, floating rate bonds, green bonds, public sector units (PSU) and capital bonds, and non-convertible debentures (NCD) .
- Fixed returns: Bonds pay fixed interest in the form of coupon rate to bondholders until they mature, providing guaranteed returns to investors.
- Diversification: By investing in debt securities in India, NRIs can geographically diversify their investment portfolio, which lowers the risk of their entire portfolio as bonds bring stability to it.
- Flexible tenure options: NRIs can invest in bonds that have maturity ranging from 91 days to over 40 years, giving them the flexibility to choose a bond for investment based on their goals and requirements.
- Repatriable: Investors can transfer the interest and investment proceeds to the NRIs account abroad. However, the investment is made through the NRE account.
- Liquidity: NRI bonds are very liquid investments. Even if investors choose a longer investment horizon, they can easily sell it in the secondary market or take a loan against it in the event of a cash shortage.
NRIs can invest in Indian bonds through various accounts, such as NRO (Non-Residential Ordinary) account, NRE (Non-Residential External) account, and FCNR (Foreign Currency Non-Residential) account[[5]](https://scripbox.com/pf/nri...
