NRIs are being bullish on parking funds they inherit in India into stocks and
are least interested in taking money out of the country.
For the past few years, NRIs have been seen selling their ancestral land or any
other property acquired in India followed by bringing the money abroad. Also,
they preferred to save the money in banks. However, the trend has been changing
now.
Contrary to earlier scenario, NRIs are largely investing in IPOs and buying
shares from the secondary market. Such investments are believed to have
increased from $362 million in 2000-01 to $6.3 billion in March 2007.
Add to it are the attracting factors from a fast flourishing stock market and a
liberal currency regime. Previously, NRIs have to face a lot of hurdles in
taking money from property transactions out of the country. But, the stringent
rules have been relaxed by RBI two years ago. And, the impact can be clearly
seen.
The figure on acquisition of shares by NRIs soared from $930 million in 2004-05
to $2.2 billion in 2005-06, to $6.3 billion in 2006-07.
NRIs have been seeking the exposure in India through the portfolio investment
scheme, subscribing to cross border funds launched by fund houses in India and
even through sub accounts of Foreign Institutional Investors (FIIs).
Talking about the general investment by the Indian Diaspora, they have been
making large investments in bank stocks. NRIs bought bank shares worth $3
billion in December 2006.
Interestingly, the recent data showcased by RBI says that 3% of the remittances
by the diaspora are invested in stocks and 54% is used for family maintenance.
The remaining per cent generally goes in other assets like real estate, bank
deposits, and other investments.
Source: Indian Realty news; 22nd July’07
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