For the layperson, the term NRI (Non-resident Indian) refers to any Indian who has been living abroad for a long time. But for Indian regulators and policymakers, your NRI status depends upon myriad conditions that can determine where and how to invest your hard-earned money. Even so, NRIs working abroad have historically maintained strong roots back home, investing the majority of their savings in India – whether you settle outside permanently or not. Every year, NRIs remit over $70bn to India, higher than any other country in the world. According to the World Bank, India received a whopping $79 bn in NRI remittances in 2018, registering a growth of 14% over 2017 – faster than global remittances, which grew approx. 9%. Promising growth prospects, flexibility, better liquidity, and better returns on investments continue to attract the NRI investor base to the country.
While India offers multiple investment options like fixed deposits, insurance, equities, property, and mutual funds, alternative investment ideas like P2P Lending have been gaining traction among those in the NRI community looking for best returns on investments. Growing by nearly 10x over the last year, Peer-to-peer( P2P) Lending is increasingly becoming a core part of the portfolio for NRI investors.
Better returns
on investment from P2P Lending
Property investments have traditionally been the most popular pick for NRIs, offering gains from the rising home prices apart from a sense of emotional and financial security. However, the slump in real estate prices has dented returns, and defaults or delays by builders have eroded trust among NRIs. Falling interest rates have led to a decline in NRI bank deposits. Equities and equity mutual funds, too, have failed to generate expected returns on investment last year, accompanied by volatile markets.
All these factors
have driven many NRIs to add alternative investment avenues, like P2P
Lending, to their investment portfolios for best
returns on their investments in the long term.
LendenClub’s
investors earned up to 17% p.a. net return on their investments last
year.
Limits on
traditional investment options for NRIs
According to FEMA
regulations, certain mutual fund investments are not available for
investments by NRIs from specific countries like the US and Canada.
When it comes to direct equities, you can buy and sell only from an
approved list of stocks, with no intra-day or short-selling allowed.
For property investments, regulations allow NRIs to buy a residential
house or a commercial property, but farmland purchases are
restricted.
P2P Lending, in
contrast, offers a better
investment option where you can invest through any
RBI-registered platform of your choice, and lend to any borrower of
your choice, based on your risk and return criteria. In fact, through
LendenClub, you can now also invest higher amounts of up to INR 50
lakhs as against earlier INR 10 lakhs as an NRI. Higher investment
amounts will help you build a broader portfolio of borrowers,
diversifying your risks
How to Invest in P2P Lending if you are an NRI
Investing in P2P Lending is easy, quick, and simple for NRIs. You can invest through LendenClub from your NRO bank account, or the rupee account held with any bank in India.
With
LendenClub, NRIs can invest in 3 easy steps:
Register with your mobile number in India
Provide KYC documents
Start building your portfolio
The EMIs, which
comprise both your principal lending amount and interest returns, get
auto-debited to an Escrow account, to be transferred to your bank
account.
While there are
several investment options for NRIs, adding P2P Lending to your
portfolio will help you generate better
overall returns on investments, with the added benefit
of diversification.
Small wonder that P2P
Lending is fast becoming a preferred alternative
investment option for NRIs globally.
