Foreign Investments in India -As per RBI Rules

I. Foreign Direct Investment (FDI)

Q. 1. What are the forms in which business can be conducted by a foreign company in India?

Ans. A foreign company planning to set up business operations in India may:

Incorporate a company under the Companies Act, 1956, as a Joint Venture or a Wholly Owned Subsidiary.

Set up a Liaison Office / Representative Office or a Project Office or a Branch Office of the foreign company which can undertake activities permitted under the Foreign Exchange Management (Establishment in India of Branch Office or Other Place of Business) Regulations, 2000.

Q.2. What is the procedure for receiving Foreign Direct Investment in an Indian company?

Ans. An Indian company may receive Foreign Direct Investment under the two routes as given under :

i. Automatic Route

FDI up to 100 per cent is allowed under the automatic route in all activities/sectors except where the provisions of the consolidated FDI Policy, paragraph on 'Entry Routes for Investment' issued by the Government of India from time to time, are attracted.

FDI in sectors /activities to the extent permitted under the automatic route does not require any prior approval either of the Government or the Reserve Bank of India.

ii. Government Route

FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. Application can be made in Form FC-IL, which can be downloaded from http://www.dipp.gov.in. Plain paper applications carrying all relevant details are also accepted. No fee is payable.

Indian companies having foreign investment approval through FIPB route do not require any further clearance from the Reserve Bank of India for receiving inward remittance and for the issue of shares to the non-resident investors.

The Indian company having received FDI either under the Automatic route or the Government route is required to report in the Advance Reporting Form, the details of the receipt of the amount of consideration for issue of equity instrument viz. shares / fully and mandatorily convertible debentures / fully and mandatorily convertible preference shares through an AD Category –I Bank, together with copy/ ies of the FIRC evidencing the receipt of inward remittances along with the Know Your Customer (KYC) report on the non-resident investors from the overseas bank remitting the amount, to the Regional Office concerned of the Reserve Bank of India within 30 days from the date of receipt of inward remittances.

Further, the Indian company is required to issue the equity instrument within 180 days, from the date of receipt of inward remittance or debit to NRE/FCNR (B) account in case of NRI/ PIO.

After issue of shares / fully and mandatorily convertible debentures / fully and mandatorily convertible preference shares, the Indian company has to file the required documents along with Form FC-GPR with the Regional Office concerned of the Reserve Bank of India within 30 days of issue of shares to the non-resident investors.

The form can also be downloaded from the Reserve Bank's website at the following address :
http://www.rbi.org.in/Scripts/BSViewFemaForms.aspx

Q.3. Which are the sectors where FDI is not allowed in India, both under the Automatic Route as well as under the Government Route?

Ans. FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors:

i) Retail Trading (except single brand product retailing)

ii) Atomic Energy

iii) Lottery Business

iv) Gambling and Betting

v) Business of Chit Fund

vi) Nidhi Company

vii) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations) (cf. Notification No. FEMA 94/2003-RB dated June 18, 2003).

viii) Housing and Real Estate business (except development of townships, construction of residen­tial/commercial premises, roads or bridges to the extent specified in Notification No. FEMA 136/2005-RB dated July 19, 2005).

ix) Trading in Transferable Development Rights (TDRs).

x ) Manufacture of cigars , cheroots, cigarillos and cigarettes , of tobacco or of tobacco substitutes.

Q.4. What is the procedure to be followed after investment is made under the Automatic Route or with Government approval?

Ans. A two-stage reporting procedure has to be followed :.

• On receipt of share application money :

Within 30 days of receipt of share application money/amount of consideration from the non-resident investor, the Indian company is required to report to the Regional Office concerned of the Reserve Bank of India, under whose jurisdiction its Registered Office is located, the Advance Reporting Form, containing the following details :

Name and address of the foreign investor/s;
Date of receipt of funds and the Rupee equivalent;
Name and address of the authorised dealer through whom the funds have been received;
Details of the Government approval, if any; and
KYC report on the non-resident investor from the overseas bank remitting the amount of consideration.
• Upon issue of shares to non-resident investors :

Within 30 days from the date of issue of shares, a report in Form FC-GPR- PART A together with the following documents should be filed with the Regional Office concerned of the Reserve Bank of India.

Certificate from the Company Secretary of the company accepting investment from persons resident outside India certifying that:

The company has complied with the procedure for issue of shares as laid down under the FDI scheme as indicated in the Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time.

The investment is within the sectoral cap / statutory ceiling permissible under the Automatic Route of the Reserve Bank and it fulfills all the conditions laid down for investments under the Automatic Route, namely-

a) Non-resident entity/ies - (other than individuals), to whom it has issued shares have existing joint venture or technology transfer or trade mark agreement in India in the same field and Conditions stipulated at Paragraph 4.2 of the Consolidated FDI policy Circular of Government of India have been complied with.

OR

Non-resident entity/ ies - (other than individuals), to whom it has issued shares do not have any existing joint venture or technology transfer or trade mark agreement in India in the same field.

Note – For the purpose of the 'same' field, 4 digit NIC 1987 code would be relevant.

b) The company is not an Industrial Undertaking manufacturing items reserved for small sector.

OR

The company is an Industrial Undertaking manufacturing items reserved for the small sector and the investment limit of 24 per cent of paid-up capital has been observed/ requisite approvals have been obtained.

c) Shares issued on rights basis to non-residents are in conformity with Regulation 6 of the RBI Notification No FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time.

OR

Shares issued are bonus shares.

OR

Shares have been issued under a scheme of merger and amalgamation of two or more Indian companies or reconstruction by way of de-merger or otherwise of an Indian company, duly approved by a court in India.

OR

Shares are issued under ESOP and the conditions regarding this issue have been satisfied.

• Shares have been issued in terms of SIA/FIPB approval No. --------------------- dated --------------------

• Certificate from Statutory Auditors/ SEBI registered Category - I Merchant Banker / Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India.
Q.5. What are the guidelines for transfer of existing shares from non-residents to residents or residents to non-residents?

Ans. A. Transfer of shares/ fully and mandatorily convertible debentures from Non-Resident to Resident:

The term ‘transfer’ is defined under FEMA as including "sale, purchase, acquisition, mortgage, pledge, gift, loan or any other form of transfer of right, possession or lien” {Section 2 (ze) of FEMA, 1999}.

The FEMA Regulations give specific permission covering the following forms of transfer i.e. transfer by way of sale and gift. These permissions are discussed below :

i. Transfer of shares/ fully and mandatorily convertible debentures by way of sale :

A person resident outside India can freely transfer shares/ fully and mandatorily convertible debenture by way of sale to a person resident in India as under :

Any person resident outside India (not being a NRI or an erstwhile OCB), can transfer by way of sale the shares/ fully and mandatorily convertible debentures to any person resident outside India or an NRI may transfer by way of sale, the shares/ fully and mandatorily convertible debentures held by him to another NRI only provided that the person to whom the shares are being transferred has obtained prior permission of the Central Government to acquire the shares if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged.

Any person resident outside India may sell shares/ fully and mandatorily convertible debenture acquired in accordance with the FEMA Regulations, on a recognized Stock Exchange in India through a registered broker.

Any person resident outside India may also sell share or convertible debenture of an Indian company to a resident subject to adherence to pricing guidelines, documentation and reporting requirements as specified from time to time.

Shares/convertible debentures of Indian companies purchased under Portfolio Investment Scheme by NRIs and erstwhile OCBs cannot be transferred, by way of sale under private arrangement.

ii. Transfer of shares/ fully and mandatorily convertible debentures by way of Gift :

A person resident outside India can freely transfer shares/ fully and mandatorily convertible debentures by way of gift to a person resident in India as under :

Any person resident outside India, (not being a NRI or an erstwhile OCB), can transfer by way of gift the shares/ fully and mandatorily convertible debentures to any person resident outside India;

a NRI may transfer by way of gift, the shares/convertible debentures held by him to another NRI only, provided that the person to whom the shares are being transferred has obtained prior permission of the Central Government to acquire the shares if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged.

Any person resident outside India may transfer share/ fully and mandatorily convertible debentures to a person resident in India by way of gift.

B. Transfer of shares/ fully and mandatorily convertible debentures from Resident to Non-Resident :

i. Transfer of shares/ fully and mandatorily convertible debentures by way of sale - General Permission under Regulation 10 of Notification No. FEMA 20/2000-RB dated May 3, 2000

A person resident in India may transfer by way of sale to a person resident outside India any shares/ fully and mandatorily convertible debenture of an Indian company whose activities (other than financial service sector activities1) fall under the Automatic Route of the FDI Scheme provided the parties concerned comply with the FDI sectoral limits, pricing guidelines, documentation and reporting requirements for such transfers, as may be specified by the Reserve Bank of India, from time to time.

However, the above general permission is not available where :

a) The transfer of shares/ fully and mandatorily convertible debentures falls within the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended from time to time.

b) The transfer of shares/ fully and mandatorily convertible debentures is at a price which does not adhere to the pricing guidelines specified by the Reserve Bank of India from time to time

c) The activity of the Indian investee company falls outside the automatic route and where FIPB approval has been obtained for the said transfer.

Q.6. Can a person resident in India transfer security by way of gift to a person resident outside India?

Ans. A person resident in India who proposes to transfer security by way of gift to a person resident outside India [other than an erstwhile OCBs] shall make an application to the Central Office of the Foreign Exchange Department, Reserve Bank of India furnishing the following information, namely:

Name and address of the transferor and the proposed transferee

Relationship between the transferor and the proposed transferee

Reasons for making the gift.

In case of Government dated securities, treasury bills and bonds, a certificate issued by a Chartered Accountant on the market value of such securities.

In case of units of domestic mutual funds and units of Money Market Mutual Funds, a certificate from the issuer on the Net Asset Value of such security.

In case of shares/ fully and mandatorily convertible debentures, a certificate from a Chartered Account on the value of such securities according to the guidelines issued by the Securities & Exchange Board of India or the Discount Free Cash Flow Cash (DCF) method with regard to listed companies and unlisted companies, respectively.

Certificate from the Indian company concerned certifying that the proposed transfer of shares/convertible debentures, by way of gift, from resident to the non-resident shall not breach the applicable sectoral cap/ FDI limit in the company and that the proposed number of shares/convertible debentures to be held by the non-resident transferee shall not exceed 5 per cent of the paid up capital of the company.

The transfer of security by way of gift may be permitted by the Reserve bank provided :

(i) The donee is eligible to hold such security under Schedules 1, 4 and 5 to Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.

(ii) The gift does not exceed 5 per cent of the paid up capital of the Indian company/ each series of debentures/ each mutual fund scheme

(iii) The applicable sectoral cap/ foreign direct investment limit in the Indian company is not breached

(iv) The donor and the donee are relatives as defined in section 6 of the Companies Act, 1956.

(v) The value of security to be transferred by the donor together with any security transferred to any person residing outside India as gift in the calendar year does not exceed the rupee equivalent of USD 25,000.

(vii) Such other conditions as considered necessary in public interest by the Reserve Bank.

Q.7. What if the transfer of shares from resident to non-resident does not fall under the above categories?

Ans. In case the transfer does not fit into any of the above categories, either the transferor (resident) or the transferee (non-resident) can make an application to the Reserve Bank for permission for the transfer of shares. The application has to be accompanied with the following documents:

A copy of the FIPB approval (if required).

Consent letter from transferor and transferee clearly indicating the number of shares, name of the investee company and the price at which the transfer is proposed to be effected.

The present/post transfer shareholding pattern of the Indian investee company showing the equity participation by residents and non-residents category-wise.

Copies of the Reserve Bank of India's approvals/ acknowledged copies of FC-GPR evidencing the existing holdings of the non-residents.

If the sellers/ transferors are NRIs / OCBs, the copies of the Reserve Bank of India's approvals evidencing the shares held by them on repatriation / non-repatriation basis.

Open Offer document filed with the SEBI if the acquisition of shares by non-resident is under SEBI Takeover Regulations.

Fair Valuation Certificate from the SEBI registered Category-I-Merchant Banker or Chartered Accountant indicating the value of shares as per the following guidelines :

a) where shares of an Indian company are listed on a recognized stock exchange in India, the price of shares transferred by way of sale shall not be less than the price at which a preferential allotment of shares can be made under the SEBI Guidelines, as applicable, provided that the same is determined for such duration as specified therein, preceding the relevant date, which shall be the date of purchase or sale of shares.

(b) where the shares of an Indian company are not listed on a recognized stock exchange in India, the transfer of shares shall be at a price not less than the fair value to be determined by a SEBI registered Category – I - Merchant Banker or a Chartered Accountant as per the Discounted Free Cash Flow (DCF) method.

Q8. What are the reporting obligations in case of transfer of shares between resident and non-resident ?

Ans. The transaction should be reported by submission of form FC-TRS to the AD Category – I bank, within 60 days from the date of receipt/remittance of the amount of consideration. The onus of submission of the form FC-TRS within the given timeframe would be on the resident in India, the transferor or transferee, as the case may be.

Q.9. What is the method of payment and remittance/credit of sale proceeds in case of transfer of shares between resident and non-resident ?

Ans. The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels. In case the buyer is a Foreign Institutional Investor (FII), payment should be made by debit to its Special Non-Resident Rupee Account. In case the buyer is a NRI, the payment may be made by way of debit to his NRE/FCNR (B) accounts. However, if the shares are acquired on non-repatriation basis by NRI, the consideration shall be remitted to India through normal banking channel or paid out of funds held in NRE/FCNR (B)/NRO accounts.

The sale proceeds of shares (net of taxes) sold by a person resident outside India) may be remitted outside India. In case of FII the sale proceeds may be credited to its special Non-Resident Rupee Account. In case of NRI, if the shares sold were held on repatriation basis, the sale proceeds (net of taxes) may be credited to his NRE/FCNR(B) accounts and if the shares sold were held on non repatriation basis, the sale proceeds may be credited to his NRO account subject to payment of taxes. The sale proceeds of shares (net of taxes) sold by an erstwhile OCB may be remitted outside India directly if the shares were held on repatriation basis and if the shares sold were held on non-repatriation basis, the sale proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the case of erstwhile OCBs whose accounts have been blocked by Reserve Bank.

Q. 10. Are the investments and profits earned in India repatriable?

Ans. All foreign investments are freely repatriable (net of applicable taxes) except in cases where:

i) the foreign investment is in a sector like Construction and Development Projects and Defence wherein the foreign investment is subject to a lock-in-period; and

ii) NRIs choose to invest specifically under non-repatriable schemes.

Further, dividends (net of applicable taxes) declared on foreign investments can be remitted freely through an Authorised Dealer bank.

Q.11. What are the guidelines on issue and valuation of shares in case of existing companies?

Ans. A. The price of shares issued to persons resident outside India under the FDI Scheme shall not be less than :

the price worked out in accordance with the SEBI guidelines, as applicable, where the shares of the company is listed on any recognised stock exchange in India;

the fair valuation of shares done by a SEBI registered Category - I Merchant Banker or a Chartered Accountant as per the discounted free cash flow method, where the shares of the company is not listed on any recognised stock exchange in India; and

the price as applicable to transfer of shares from resident to non-resident as per the pricing guidelines laid down by the Reserve Bank from time to time, where the issue of shares is on preferential allotment.

B. The price of shares transferred from resident to a non-resident and vice versa should be determined as under:

i) Transfer of shares from a resident to a non-resident:

a) In case of listed shares, at a price which is not less than the price at which a preferential allotment of shares would be made under SEBI guidelines.

b) In case of unlisted shares at a price which is not less than the fair value as per the Discount Free Cash Flow (DCF) Method to be determined by a SEBI registered Category-I- Merchant Banker/Chartered Accountant.

ii) Transfer of shares from a non-resident to a resident - The price should not be more than the minimum price at which the transfer of shares would have been made from a resident to a non-resident.

In any case, the price per share arrived at as per the above method should be certified by a SEBI registered Category-I-Merchant Banker / Chartered Accountant.

Q. 12. What are the regulations pertaining to issue of ADRs/ GDRs by Indian companies?

Ans.

Indian companies can raise foreign currency resources abroad through the issue of ADRs/ GDRs, in accordance with the Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India thereunder from time to time.
A company can issue ADRs / GDRs, if it is eligible to issue shares to persons resident outside India under the FDI Scheme. However, an Indian listed company, which is not eligible to raise funds from the Indian Capital Market including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI) will not be eligible to issue ADRs/GDRs.
Unlisted companies, which have not yet accessed the ADR/GDR route for raising capital in the international market, would require prior or simultaneous listing in the domestic market, while seeking to issue such overseas instruments. Unlisted companies, which have already issued ADRs/GDRs in the international market, have to list in the domestic market on making profit or within three years of such issue of ADRs/GDRs, whichever is earlier.
After the issue of ADRs/GDRs, the company has to file a return in Form DR as indicated in the RBI Notification No. FEMA.20/ 2000-RB dated May 3, 2000, as amended from time to time. The company is also required to file a quarterly return in Form DR- Quarterly as indicated in the RBI Notification ibid.
There are no end-use restrictions on GDR/ADR issue proceeds, except for an express ban on investment in real estate and stock markets.
Erstwhile OCBs which are not eligible to invest in India and entities prohibited to buy, sell or deal in securities by SEBI will not be eligible to subscribe to ADRs / GDRs issued by Indian companies.
The pricing of ADR / GDR issues including sponsored ADRs / GDRs should be made at a price determined under the provisions of the Scheme of issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Government of India and directions issued by the Reserve Bank, from time to time.
Q.13. What is meant by Sponsored ADR & Two-way fungibility Scheme of ADR/ GDR?

Ans. Sponsored ADR/GDR: An Indian company may sponsor an issue of ADR/ GDR with an overseas depository against shares held by its shareholders at a price to be determined by the Lead Manager. The operative guidelines for the same have been issued vide A.P. (DIR Series) Circular No.52 dated November 23, 2002.

Two-way fungibility Scheme : Under the limited Two-way fungibility Scheme, a registered broker in India can purchase shares of an Indian company on behalf of a person resident outside India for the purpose of converting the shares so purchased into ADRs/ GDRs. The operative guidelines for the same have been issued vide A.P. (DIR Series) Circular No.21 dated February 13, 2002. The Scheme provides for purchase and re-conversion of only as many shares into ADRs/ GDRs which are equal to or less than the number of shares emerging on surrender of ADRs/ GDRs which have been actually sold in the market. Thus, it is only a limited two-way fungibility wherein the headroom available for fresh purchase of shares from domestic market is restricted to the number of converted shares sold in the domestic market by non-resident investors. So long the ADRs/ GDRs are quoted at discount to the value of shares in domestic market, an investor will gain by converting the ADRs/ GDRs into underlying shares and selling them in the domestic market. In case of ADRs/ GDRs being quoted at premium, there will be demand for reverse fungibility, i.e. purchase of shares in domestic market for re-conversion into ADRs/ GDRs. The scheme is operationalised through the Custodians of securities and stock brokers under SEBI.

Q.14. Can Indian companies issue Foreign Currency Convertible Bonds (FCCBs)?

Ans. FCCBs can be issued by Indian companies in the overseas market in accordance with the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993.

The FCCB being a debt security, the issue needs to conform to the External Commercial Borrowing guidelines, issued by RBI vide Notification No. FEMA 3/2000-RB dated May 3, 2000, as amended from time to time.

Q.15. Can a foreign investor invest in Preference Shares? What are the regulations applicable in case of such investments?

Ans. Yes. Foreign investment through preference shares is treated as foreign direct investment. However, the preference shares should be fully and mandatorily convertible into equity shares within a specified time to be reckoned as part of share capital under FDI. Investment in other forms of preference shares requires to comply with the ECB norms.

Q.16. Can a company issue debentures as part of FDI ?

Ans. Yes. Debentures which are fully and mandatorily convertible into equity within a specified time would be reckoned as part of equity under the FDI Policy.

Q.17. Can shares be issued against Lumpsum Fee, Royalty and ECB?

Ans. An Indian company eligible to issue shares under the FDI policy and subject to pricing guidelines as specified by the Reserve Bank from time to time, may issue shares to a person resident outside India :

being a provider of technology / technical know-how, against Royalty / Lumpsum fees due for payment; and

against External Commercial Borrowing (ECB) (other than import dues deemed as ECB or Trade Credit as per RBI Guidelines).

Provided, that the foreign equity in the company, after the conversion of royalty / lumpsum fee / ECB into equity, is within the sectoral cap notified, if any.

Q.18. What are the other modes of issues of shares for which general permission is available under RBI Notification No. FEMA 20 dated May 3, 2000?

Ans.

Issue of shares under ESOP by Indian companies to its employees or employees of its joint venture or wholly owned subsidiary abroad who are resident outside India directly or through a Trust up to 5% of the paid up capital of the company.

Issue and acquisition of shares by non-residents after merger or de-merger or amalgamation of Indian companies.

Issue shares or preference shares or convertible debentures on rights basis by an Indian company to a person resident outside India.

Q.19. Can a foreign investor invest in shares issued by an unlisted company in India?

Ans. Yes. As per the regulations/guidelines issued by the Reserve Bank of India/Government of India, investment can be made in shares issued by an unlisted Indian company.

Q. 20. Can a foreigner set up a partnership/ proprietorship concern in India?

Ans. No. Only NRIs/PIOs are allowed to set up partnership/proprietorship concerns in India on non-repatriation basis.

Q.21. Can a foreign investor invest in Rights shares issued by an Indian company at a discount?

Ans. There are no restrictions under FEMA for investment in Rights shares issued at a discount by an Indian company, provided the rights shares so issued are being offered at the same price to residents and non-residents. The offer on right basis to the persons resident outside India shall be :

(a) in the case of shares of a company listed on a recognized stock exchange in India, at a price as determined by the company; and

(b) in the case of shares of a company not listed on a recognized stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to resident shareholders.

II. Foreign Technology Collaboration Agreement

Whether the payment in terms of foreign technology collaboration agreement' can be made by an Authorised Dealer (AD) bank?

Ans. Yes, RBI has delegated the powers, to make payments for royalty, lumpsum fee for transfer of technology and payment for use of trademark/brand name in terms of the foreign technology collaboration agreement entered by the Indian company with its foreign partners, to the AD banks subject to compliance with the provisions of Foreign Exchange Management (Current Account Transactions) Rules, 2000. Further, the requirement of registration of the agreement with the Regional Office of Reserve Bank of India has also been done away with.

III. Foreign Portfolio Investment

Q.1. What are the regulations regarding Portfolio Investments by SEBI registered Foreign Institutional Investors (FIIs)?

Ans.

Investment by SEBI registered FIIs is regulated under SEBI (FII) Regulations, 1995 and Regulation 5(2) of FEMA Notification No.20 dated May 3, 2000, as amended from time to time. FIIs include Asset Management Companies, Pension Funds, Mutual Funds, Investment Trusts as Nominee Companies, Incorporated / Institutional Portfolio Managers or their Power of Attorney holders, University Funds, Endowment Foundations, Charitable Trusts and Charitable Societies.
SEBI acts as the nodal point in the registration of FIIs. The Reserve Bank of India has granted general permission to SEBI Registered FIIs to invest in India under the Portfolio Investment Scheme (PIS).
Investment by SEBI registered FIIs and its sub accounts cannot exceed 10per cent of the paid up capital of the Indian company. However, in case of foreign corporates or High Networth Individuals (HNIs) registered as sub accounts of an FII, their investment shall be restricted to 5 per cent of the paid up capital of the Indian company. All FIIs and their sub-accounts taken together cannot acquire more than 24 per cent of the paid up capital of an Indian Company. An Indian company can raise the 24 per cent ceiling to the sectoral cap / statutory ceiling, as applicable, by passing a resolution by its Board of Directors followed by passing a Special Resolution to that effect by their General Body. The Indian company has to intimate the raising of the FII limit to the Reserve Bank to enable the Bank to notify the same on its website for larger public dissemination.
Q.2. What are the regulations regarding Portfolio Investments by NRIs/PIOs?

Ans.

Non- Resident Indian (NRIs) and Persons of Indian Origin (PIOs) can purchase or sell shares/ fully and mandatorily convertible debentures of Indian companies on the Stock Exchanges under the Portfolio Investment Scheme. For this purpose, the NRI/ PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment. All sale/ purchase transactions are to be routed through the designated branch.

An NRI or a PIO can purchase shares up to 5 per cent of the paid up capital of an Indian company. All NRIs/PIOs taken together cannot purchase more than 10 per cent of the paid up value of the company. This limit can be increased by the Indian company to 24 per cent by passing a General Body resolution. The Indian company has to intimate the raising of the FII limit to the Reserve Bank to enable the Bank to notify the same on its website for larger public dissemination.

The sale proceeds of the repatriable investments can be credited to the NRE/ NRO, etc. accounts of the NRI/ PIO, whereas the sale proceeds of non-repatriable investment can be credited only to NRO accounts.

The sale of shares will be subject to payment of applicable taxes.

IV. Investment in other securities

Q.1. Can a Non-resident Indian(NRI) and SEBI registered Foreign Institutional Investor (FII) invest in Government Securities/ Treasury bills and Corporate debt?

Ans. Under the FEMA Regulations, only NRIs andSEBI registered FIIs are permitted to purchase Government Securities/Treasury bills and Corporate debt. The details are as under :

A. A Non-resident Indian can purchase without limit,

(1) on repatriation basis

i) Dated Government securities (other than bearer securities) or treasury bills or units of domestic mutual funds;
ii) Bonds issued by a public sector undertaking (PSU) in India; and
iii) Shares in Public Sector Enterprises being disinvested by the Government of India.

(2) on non-repatriation basis

Dated Government securities (other than bearer securities) or treasury bills or units of domestic mutual funds;
Units of Money Market Mutual Funds in India; and
National Plan/Savings Certificates.
B. A SEBI registered FII may purchase, on repatriation basis, dated Government securities/ treasury bills, listed non-convertible debentures/ bonds issued by an Indian company and units of domestic mutual funds either directly from the issuer of such securities or through a registered stock broker on a recognised stock exchange in India.

The FII investment in Government securities and Corporate debt is subject to a ceiling decided in consultation with the Government of India. Investment limit for the FIIs as a group in Government securities currently is USD 10 billion and in Corporate debt is USD 20 billion.

Q.2. Can a NRI and SEBI registered FII invest in Tier I and Tier II instruments issued by banks in India?

Ans . SEBI registered FIIs and NRIs have been permitted to subscribe to the Perpetual Debt instruments (eligible for inclusion as Tier I capital) and Debt Capital instruments (eligible for inclusion as upper Tier II capital), issued by banks in India and denominated in Indian Rupees, subject to the following conditions :

a. Investment by all FIIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 49 per cent of each issue and investment by individual FII should not exceed the limit of 10 per cent of each issue.

b. Investments by all NRIs in Rupee denominated Perpetual Debt instruments (Tier I) should not exceed an aggregate ceiling of 24 per cent of each issue and investments by a single NRI should not exceed 5 percent of each issue.

c. Investment by FIIs in Rupee denominated Debt Capital instruments (Tier II) shall be within the limits stipulated by SEBI for FII investment in corporate debt instruments.

d. Investment by NRIs in Rupee denominated Debt Capital instruments (Tier II) shall be in accordance with the extant policy for investment by NRIs in other debt instruments.

e. Investment by FIIs in Rupee denominated Upper Tier II Instruments raised in Indian Rupees will be within the limit prescribed by the SEBI for investment in corporate debt instruments. However, investment by FIIs in these instruments will be subject to a separate ceiling of USD 500 million.

f. The details of the secondary market sales / purchases by FIIs and the NRIs in these instruments on the floor of the stock exchange are to be reported by the custodians and designated Authorised Dealer banks respectively, to the Reserve Bank through the soft copy of the Forms LEC (FII) and LEC (NRI).

Q.3. Can a NRI and SEBI registered FIIinvest in Indian Depository Receipts (IDRs)?

Ans. NRI and SEBI registered FIIs have been permitted to invest, purchase, hold and transfer IDRs of eligible companies resident outside India and issued in the Indian capital market, subject to the following conditions :

(i) The purchase, hold and transfer of IDRs is in accordance with the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 notified vide Notification No. FEMA 20 / 2000-RB dated May 3, 2000, as amended from time to time.

(ii) Automatic fungibility of IDRs is not permitted.

(iii) IDRs shall not be redeemable into underlying equity shares before the expiry of one year period from the date of issue of the IDRs.

(iv) At the time of redemption / conversion of IDRs into the underlying shares, the Indian holders (persons resident in India) of IDRs shall comply with the provisions of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 notified vide Notification No. FEMA 120 / RB-2004 dated July 7 2004, as amended from time to time.

(v) The FEMA provisions shall not apply to the holding of the underlying shares, on redemption of IDRs by the FIIs including SEBI approved sub-accounts of the FIIs and NRIs.

Q.4. Can aperson resident in India invest in the Indian Depository Receipts (IDRs)? What is the procedure for redemption of IDRs held by persons resident in India?

Ans. A person resident in India may purchase, hold and transfer IDRs of eligible companies resident outside India and issued in the Indian capital market. The FEMA Regulations shall not be applicable to persons resident in India as defined under section 2(v) of FEMA, 1999, for investing in IDRs and subsequent transfer arising out of a transaction on a recognized Stock Exchange in India. However, at the time of redemption / conversion of IDRs into underlying shares, the Indian holders (persons resident in India) of IDRs shall comply with the provisions of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 notified vide Notification No. FEMA 120 / RB-2004 dated July 7 2004, as amended from time to time. The following guidelines shall be followed on redemption of IDRs by persons resident in India:

i. Listed Indian companies may either sell or continue to hold the underlying shares subject to the terms and conditions as per Regulations 6B and 7 of Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time.

ii. Indian Mutual Funds, registered with SEBI may either sell or continue to hold the underlying shares subject to the terms and conditions as per Regulation 6C of Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time.

iii. Other persons resident in India including resident individuals are allowed to hold the underlying shares only for the purpose of sale within a period of 30 days from the date of conversion of the IDRs into underlying shares.

V. Foreign Venture Capital Investment

Q.5. What are the regulations for Foreign Venture Capital Investment?

Ans.

A SEBI registered Foreign Venture Capital Investor has general permission from the Reserve Bank of India to invest in a Venture Capital Fund (VCF) or an Indian Venture Capital Undertaking (IVCU), in the manner and subject to the terms and conditions specified in Schedule 6 of RBI Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. These investments by SEBI registered FVCI, would be subject to the SEBI regulation and sector specific caps of FDI.
FVCIs can purchase equity / equity linked instruments / debt / debt instruments, debentures of an IVCU or of a VCF through initial public offer or private placement in units of schemes / funds set up by a VCF. At the time of granting approval, the Reserve Bank permits the FVCI to open a Foreign Currency Account and/ or a Rupee Account with a designated branch of an AD Category – I bank.
The purchase / sale of shares, debentures and units can be at a price that is mutually acceptable to the buyer and the seller.
AD Category – I banks can offer forward cover to FVCIs to the extent of total inward remittance. In case the FVCI has made any remittance by liquidating some investments, original cost of the investments has to be deducted from the eligible cover to arrive at the actual cover that can be offered.
VI. Branch/ Project/ Liaison Office of a foreign company in India

Q.1. How can foreign companies open Liaison /Branch office in India?

Ans.

A. With effect from February 1, 2010, foreign companies/entities desirous of setting up of Liaison Office / Branch Office (LO/BO) are required to submit their application in Form FNC along with the documents mentioned therein to Foreign Investment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai through an Authorised Dealer bank. This form is available at www.rbi.org.in

B. The applications from such entities in Form FNC will be considered by the Reserve Bank under two routes:

Reserve Bank Route - Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.

Government Route - Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non - Government Organisations / Non - Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.

C. The following additional criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities :

• Track Record

For Branch Office — a profit making track record during the immediately preceding five financial years in the home country.

For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country.

• Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].

For Branch Office — not less than USD 100,000 or its equivalent.

For Liaison Office — not less than USD 50,000 or its equivalent.

D. Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by the Authorised Dealer in whose jurisdiction the office is set up. The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN) ( www.rbi.org.in/scripts/Fema.aspx ). The BOs / LOs shall also obtain Permanent Account Number (PAN) from the Income Tax Authorities on setting up the offices in India.

E. Liaison/Branch offices have to file an Annual Activity Certificate (AACs) from the Auditors, as at end of March 31, along with the audited Balance Sheet on or before September 30 of that year, stating that the Liaison Office has undertaken only those activities permitted by Reserve Bank of India. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet.

Q.2. What are the permitted activities of Liaison Office/ Representative Office?

Ans. A Liaison Office (also known as Representative Office) can undertake only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances of foreign exchange from the Head Office outside India. The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers. A Liaison Office can undertake the following activities in India :

i. Representing in India the parent company / group compa­nies.

ii. Promoting export / import from / to India.

iii. Promoting technical/financial collaborations be­tween parent/group companies and companies in India.

iv. Acting as a communication channel between the parent company and Indian companies.

Q.3. Can Foreign Insurance Companies / Banks set up Liaison Office in India?

Ans. Foreign Insurance companies can establish Liaison Offices in India only after obtaining approval from the Insurance Regulatory and Development Authority (IRDA). Similarly, foreign banks can establish Liaison Offices in India only after obtaining approval from the Department of Banking Operations and Development (DBOD), Reserve Bank of India.

Q. 4. What is the procedure for setting up Branch office?

Ans. Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. Reserve Bank of India considers the track record of the applicant company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinising the application. The application in Form FNC should be submitted to the Reserve Bank through the Authorised Dealer bank.

Q.5. What are the permitted activities of Branch Office?

Ans. Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India :

i. Export / Import of goods2.
ii. Rendering professional or consultancy services.
iii. Carrying out research work, in areas in which the parent company is engaged.
iv. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
v. Representing the parent company in India and acting as buying / selling agent in India.
vi. Rendering services in information technology and devel­opment of software in India.
vii. Rendering technical support to the products sup­plied by parent/group companies.
viii. Foreign airline / shipping company.

Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.

Note :

Retail trading activities of any nature is not allowed for a Branch Office in India.

A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.

Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.

Q.6. Whether Branch Offices are permitted to remit profit outside India?

Ans. Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorised Dealer through whom the remittance is effected :

a. A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year;

b. A Chartered Accountant’s certificate certifying -

i . the manner of arriving at the remittable profit
ii. that the entire remittable profit has been earned by undertaking the permitted activities
iii. that the profit does not include any profit on revaluation of the assets of the branch.

Q.7 What are the documents to be submitted to the AD bank at the time of closure of the Liaison/ Branch Office?

Ans. At the time of winding up of Branch/Liaison offices, the company has to approach the designated AD Category - I bank with the following documents:

a) Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the BO / LO.

b) Auditor’s certificate - i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;

ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and

iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un-repatriated to India.

c) No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s.

d) Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.

e) A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.

f) Any other document/s, specified by the Reserve Bank while granting approval.

Q.8. What is the procedure for setting up Project Office?

Ans. The Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and

the project is funded directly by inward remittance from abroad; or

the project is funded by a bilateral or multilateral International Financing Agency; or

the project has been cleared by an appropriate authority; or

a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project.

However, if the above criteria are not met or if the parent entity is established in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, such applications have to be forwarded to the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai for approval.

Q.9. What are the bank accounts permitted to a Project Office?

Ans. AD Category – I banks can open non-interest bearing Foreign Currency Account for Project Offices in India subject to the following:

The Project Office has been established in India, with the general / specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority concerned.

The contract, under which the project has been sanctioned, specifically provides for payment in foreign currency.

Each Project Office can open two Foreign Currency Accounts, usually one denominated in USD and other in home currency, provided both are maintained with the same AD category–I bank.

The permissible debits to the account shall be payment of project related expenditure and credits shall be foreign currency receipts from the Project Sanctioning Authority, and remittances from parent/ group company abroad or bilateral / multilateral international financing agency.

The responsibility of ensuring that only the approved debits and credits are allowed in the Foreign Currency Account shall rest solely with the branch concerned of the AD. Further, the Accounts shall be subject to 100 per cent scrutiny by the Concurrent Auditor of the respective AD banks.

The Foreign Currency accounts have to be closed at the completion of the Project.

Q.10. What are the general conditions applicable to Liaison / Branch / Project Office of foreign entities in India?

Ans. The general conditions applicable to Liaison/Branch/Project Office of foreign entities in India are as under;

(i) Without prior permission of the Reserve Bank, no person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China can establish in India, a Branch or a Liaison Office or a Project Office or any other place of business.

(ii) Partnership / Proprietary concerns set up abroad are not allowed to establish Branch /Liaison/Project Offices in India.

(iii) Entities from Nepal are allowed to establish only Liaison Offices in India.

(iv) Branch/Project Offices of a foreign entity, excluding a Liaison Office are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China are not allowed to acquire immovable property in India even for a Branch Office. These entities are allowed to lease such property for a period not exceeding five years.

(v) Branch / Liaison / Project Offices are allowed to open non-interest bearing INR current accounts in India. Such Offices are required to approach their Authorised Dealers for opening the accounts.

(vi) Transfer of assets of Liaison / Branch Office to subsidiaries or other Liaison/Branch Offices is allowed with specific approval of the Central Office of the Reserve Bank.

(viii) Authorised Dealers can allow term deposit account for a period not exceeding 6 months in favor of a branch/office of a person resident outside India provided the bank is satisfied that the term deposit is out of temporary surplus funds and the branch / office furnishes an undertaking that the maturity proceeds of the term deposit will be utilised for their business in India within 3 months of maturity. However, such facility may not be extended to shipping/airline companies.

Investing in Indian stock markets- Guide for NRI’s

For most NRI’s the difficult part about knowing how to go about investing in Indian stock markets is-finding one place where they can get all the required information. There’s isn’t much complicated process involved in opening a share investment account in India. There are only 3 steps involved.
Step 1 : Get your PAN Card
Step 2 : Open an NRE/NRO account.
Step 3 : Open demat/trading account

Step 1: Pan Card
PAN – stands for ‘Permanent Account Number’ and it is just an identification number like your ‘Social Security Number’ in the United States or ‘Social Insurance Number’ in Canada. The PAN card will have your photograph, date of birth and signature on it.PAN is mandatory for everyone who wishes to invest in Indian stock market.
Step 2: NRE/NRO Account.
NRE stands for Non Resident External Account and NRO stands for Non Resident Ordinary account.
How to decide whether you need NRE or NRO account?
Here are some pointers:
Decide whether you want to repatriate (take back your profits/principal from share markets) to your country. If you want to take back the amount then, you should open NRE (Non Resident External) Account and if you do not want to repatriate, open NRO (Non Resident Ordinary) Account.
Please remember that as an NRI you can’t operate normal resident savings bank account i.e. all existing resident bank accounts should be converted to NRO accounts once a person becomes NRI. NRO accounts are generally opened by the NRI’s to deposit previous or existing income earned in India in Rupees.
So, if you have money flowing in from abroad alone, what you need is an NRE account. But, if you have some source of income in India too, you need to open an NRO account.
Step 3- Open Demat/trading account.
Final step would be to open a demat account- an account to maintain your online purchase and sale of shares. Demat and trading account can be opened with any registered broker. That’s it. Once your trading and demat accounts are open, you can invest in Indian share markets. The entire process of transferring funds and buying/ selling can be done online .
General documents required to open a share investment account:
Self attested Copy of Passport & Visa
Self attested Copy of Indian Address proof & Overseas Address proof.
Self attested Copy of Pan Card
Passport size photos.
Bank statement for 3 months
A cancelled cheque and a cheque for initial investment.
Other important informations:
It is always better for an NRI to operate through a power of attorney holder in India. There are many investors who do this and it’s also a lot easier and faster.
NRI’s can invest in the Indian stock market under PIS (Portfolio Investment Scheme) which is regulated by RBI.
Port folio Investment scheme is a Scheme is regulated by Reserve Bank of India (RBI). RBI monitors the investments made by non-residents so that it can keep a tab on money flowing into India from outside the country.
NRI’s are not allowed to trade in the stock market on day to day basis. i.e., you cannot buy and sell on the same day (Day trades or intra day trades as it’s usually called). Day trades are akin to speculation. NRI’s are not allowed to speculate on a day-to-day basis in the markets.
You can nominate only one bank account for your stock trading.
Futures and Options are not permitted for NRI’s.
Individually any NRI or a PIO cannot invest more than 5% stake in any Indian company.
NRE bank account- explained
NRE means Non Resident External rupee bank accounts.
Balances held in NRE accounts can be repatriated abroad freely. This account is used for depositing money from abroad. An NRE account keeps the money in Indian Rupee. NRE account will let you convert your original foreign currency investment into Indian Rupees for investment in India and then convert it back to the foreign currency.
These accounts cannot be held jointly with residents. But, Joint operation with other NRIs is permitted.
A Power of attorney can be granted to residents for operation of accounts. Money once deposited in this account can only be withdrawn for local payments including investments.
Interest on deposits in an NRE accounts is tax free in India. The balance lying on the account does not attract wealth tax. Any gifts given from the money lying in this account does not attract gift tax.
Once you have the NRE account, you can invest funds to share market.
Those who already have NRE bank accounts should check with their bankers to find out whether those are suitable for stock investments. Not all NRE/NRO bank accounts are suitable for investments.
Investors should make sure you read all the fine prints regarding charges applicable.
NRI vs PIO
A Non-resident Indian (NRI) is a person who is a citizen of India or a person of Indian origin, currently residing outside India. To qualify for NRI status you must:
(1) Reside outside India for more than 182 days per year, and;
(2) Hold Indian citizenship, or;
(3) Be a Person of Indian Origin (PIO) as defined in the Foreign Exchange Management Deposit Regulations of 2000
Condition no.1 is mandatory and condition 2 OR 3 should be satisfied
A PIO (Person of Indian Origin) means a citizen of any country other than Bangladesh or Pakistan, if-
1. He at any time held Indian passport or
2. He or either of his parents or any of his grand- parents was a citizen of India or
3. The person is a spouse of an Indian citizen or a person referred to in 1 or 2 above.

Financial Steps Before Becoming An Non Resident Indian

Are you planning to go abroad and become am NRI? Today you are a Resident Indian. Tomorrow you may become an NRI if your employer provides an opportunity. When an opportunity like this knocks at our door, are we ready to face the change? Are we prepared?

Creating a Checklist or ‘to-do list’ helps to ensure consistency and completeness in carrying out a task. Becoming an NRI is a major transition which definitely needs a checklist. Here is a personal finance check list to be taken care before departing from India.

NRO & NRE ACCOUNT:

The first thing to do is to convert your savings bank account to an NRO or NRE account. An NRO or non-resident ordinary account is like an ordinary savings bank account that gives a domestic rate of interest. This account can be used for depositting your domestic earnings like rent, interest and dividends and remittances from abroad into this account. Cheques can be issued for EMI and investment, but there are restrictions for transferring money to the country of residence. Money in this account is non-repatriable.

You can transfer current income earned in India, but transfer of sales proceeds of property and investments can be only to the extent of 1 million $’s a year. A certificate from a chartered accountant, declaring that all taxes have been paid has to be furnished. It is important noting that an NRO account invites a tax of about 30.9% at source.

An NRE or non-resident external account can be opened with foreign currency when you wish to transfer substantial money to the country of your residence. There is neither restriction to remittance nor any taxes in this account, but you would only get a low rate of interest. This account offers no facility to receive incomes in the shape of rent, interest and dividends, but you can make local payment in rupees, invest money and receive proceeds from sale of investments and property.

It is much easier to open both these accounts in India, with you requiring giving 2 passport size photographs along with a copy of your passport and visa. In case you are already abroad, it is mandatory to get an attestation from the Indian Embassy or Notary before sending it to the bank branch.

DEMAT ACCOUNT

The next step is to close your domestic demat account and open a non-resident ordinary (NRO) demat account under the Portfolio Investment Scheme (PINS). This is mandatory, as there are restrictions to the amount of investment that an NRI can make in the shares and stocks in Indian companies; it should not exceed 5% of the paid–up capital of any Indian company. You need to transfer your existing share holdings also into this account.

You have the option of 2 types of separate demat accounts namely for repatriable and non-repatriable shares and this account is to be separate from other bank accounts. Your demat service provider would help you on submission of copies of passport and visa. Once you return back to your country you can close the PINS demat account.

Power Of Attorney:

The third step is to give the power of attorney to someone you trust in India to manage financial transactions in bank accounts, buying and selling real estate, renting out property and signing up tax forms. The power of attorney could be general, where the authority entrusted holds good for banking as well as real estate transactions or could be specific, where the authority is restrictive to only certain transactions. Consulting a lawyer and submitting attested copies to the concerned people like banks and mutual funds proves essential.

Update your NRI status in Various KYCs:

The last step is inform the mutual fund, bank and insurance companies by submitting the updated Know Your Customer forms stating your change of status as a non-resident Indian. Your Financial Planner and Iagent and bank branch could help you best regarding the different formalities that are required.

Now you are all set to assume your NRI status.

What’s this US debt ceiling crisis

The United States debt ceiling crisis was a financial crisis that threatened a US government default.The debate was about increasing the upper limit of the debt ceiling, whether or not it should be increased, and by what amount.The United States government expects to take in about $170 billion in revenues. Expenses will likely total more than $300 billion, however, so about $130 will have to be raised by borrowing.

That is normal. The US government is deeply in debt – more than 14 trillion dollars – and it borrows to meet its debt obligations every month. There are usually more than enough people willing to lend the US government money because it is seen as a very safe investment.

What is not normal is that for the first time a substantial number of Republican lawmakers are not willing to allow the additional borrowing unless huge spending cuts without tax increases are agreed on. They have the power to force spending cuts because of what is called the "debt ceiling".

Periodically, the Congress authorises the US Treasury Department to borrow money up to a certain limit. That is the debt ceiling. In the past, whenever the debt ceiling was reached, Congress simply voted to increase it. That has happened dozens of times in the past without problems, but not this time.

The last election brought a large group of new Republican lawmakers into the US House of Representatives who were committed to forcing the government into balancing its budget. They are refusing to support raising the debt ceiling unless their demands are met. Since the Republicans control the House of Representatives, this threat has been taken very seriously.

This is a dangerous game, because if the debt ceiling is not raised very quickly, the US Treasury Department will run out of money and it will not be able to pay its bills. This could result in financial panic throughout the world, because so many people around the world either receive payments from the US government or have lent it money.

It now looks likely that some sort of a compromise will be reached at the last minute and a default on US government debts will not occur. Watch to see what kind of a deal is reached – if it is reached.

Importance of Term Life Insurance

Terms plans – often termed as cheapest form of insurance are a low premium , higher cover , longer coverage insurance product with an ease of buying online. It is heartening that more and more consumers are looking to buy ‘term insurance’ and keeping their insurance and investment needs separate. Term life insurance policies provide financial security for families in the event of the insured’s death. Coverage lasts for a set period or term ; policy owners can buy term insurance for 5, 10, 20 or even 30 years. Once the term of the policy expires, the coverage will be terminated. Term policies are inexpensive compared to permanent life insurance plans. Term life policy owners may also benefit from the simplicity and flexible nature of these insurance plans.

For beginners , pure term insurance policies , pay the sum assured (or insurance cover) only on the policyholder’s death. The policies don’t have any investment component. That means that if the insurance buyer survives the term of the policy , he doesn’t get anything. However one has an option to add additional benefits such as accidental death and disability benefits and health riders with the basic term insurance policy.

For regular premium policies , the premium once fixed at the time of purchase of the policy remains the same throughout the premium paying term of the policy. If the insurance company experiences adverse morality – that is more deaths that what it has assumed at the time of product filing – the company may choose to increase the premium for the new customers. In India over a period of time , the morality experience has been improving for the life insurance companies , which is getting reflected in the low premiums for term life insurance covers.

Increased competition in Indian insurance market consisting of more than 20 private insurers have resulted in term plans being available at attractive rates to what they were couple of years ago.
What should i get at end of term-plan policy? - like questions shouldn’t crop in. while buying a term cover Here you have bought a term cover and your dependents will be compensated if something happens to you during the term of the cover. If you outlive the policy you won’t get anything at the end of the policy.

Why term plans make sense :

(a) Lower premiums : The premium is lower by up-to 40% compared to earlier rates.

(b) Higher Cover : Companies are encouraging buyers to take a higher cover. If a 25 lakhs cover is for INR 3,695 , a 1 crore cover costs INR 9706.

(c) Longer Coverage : Cover can be taken till up-to 75 years of age as compared to 60-65 earlier.

(d) Buying ease : Online term plans can be bought by individual himself.


Things to remember while buying term insurance :
(a) Adequate Cover : Make sure cover is large enough.

Expert advises a life cover of 12 times your annual income minus your investment assets plus any liabilities (includes amount of your outstanding loans). Life insurance is required in case you are earning with your effort and have dependent family members. If that’s not the case you don’t need life insurance.Young unmarried earning members with no dependents , children , homemakers , retired people don’t need life insurance. Make sure you take into account inflation , possible increase in salary and changes in life style of your family.

The loan burden (ongoing housing/ personal loan, etc.) that will fall on the family post your lifetime, the impending cash requirements for children’s education, wedding, healthcare needs of the spouse and other dependents in the family and so on are some of the things that should determine the sum assured of a term life policy.

On claim, the benefit under a term policy will be paid as a lump-sum to the insured’s nominee or the beneficiary of the policy. And the good news here is that this lump-sum amount doesn’t fall under the tax net. Insurers give term life policies for a maximum tenure of 30-35 years now.

The policy’s premium will rise as the sum assured increases and the insurer may also require a medical check-up. For a male aged 30 years and a sum assured of Rs 30 lakh, the premium of a pure term policy is around Rs 5,000-8,000 (for a term of thirty years) now. And, if you are looking to buy a rider with the policy – say a personal accident cover, then cost will add up further.
(b) Choose Maximum Term : Pick the maximum term as buying a fresh plan later in life will be costly. Ideally tenure of policy should be retirement age minus you present age. This means if you are 30 now and wish to retire at 60 , term of policy should be 30 years. Buy a cover that will offer you protection till you retire.

(c) Cover Loans Too : If you have big ticket debts , cover them also. You can choose a plan where cover progressively decreases.

(d) Review Cover : At every life stage (ideally 3-5 years) , review your existing life cover and attune it to current needs. Over the period your personal circumstances , income , assets , liabilities would have gone through certain changes. So its always good to review your requirements after 3-5 years.

(e) Mind inflation : As living costs rise , so are insurance needs.Buy more or opt for a plan where the cover keeps increasing.

(f) Buy policy online : Term insurance products are also sold online and these products are much cheaper compared to ones sold by agents and brokers. Selling the products over internet does away with the agent’s commission thus bringing down the overall cost of the policy

When buying a term life policy, it is best to go online with several life insurers now offering the online option for buying term policies. When buying online, the advantage is that you save on premium. Agent commission, which is a significant proportion of the cost associated with an insurance product, is not charged while buying policies online but is passed on as a discount to the buyers.

In on-line policies however, one has to go through some minimum documentation work (and medical check-up too if required). But in simple steps, you can get a quote and apply for the policy on the insurer’s website itself. Aegon Religare, ICICI Prudential, Kotak Life are some insurers that are offering term policies online.

However, the premium on the policy should not be the only deciding factor here. The reputation of the insurer is also a key factor. For this you can check the insurer’s ‘claim settlement’ ratio – this is the percentage of claims settled by the insurer of the total he received.

The information on this is available at IRDA’s website, in its annual report for 2009-10. The insurer with the highest claim paid ratio is Life Insurance Corporation (96.5 per cent), followed by HDFC Standard (91.1 per cent) and ICICI Prudential (90.2 per cent).

(g) Don’t be distracted by riders : Additional covers of accidental death and disability arising from accidents are available on standalone as well , so don’t choose expensive term plan just because some of them have riders available.

(h) Disclose Everything : Disclose everything to the best of your knowledge while buying the policy including your existing health conditions , family history and all existing and proposed insurance including details of any insurance policy refused or provided at higher than normal premium in the past.
(i) Take medical tests : It will always be good for you to go for medical tests as this will reduce any chances of claim being rejected.

(j) Consider buying policy in blocks : For instance , if you need a cover of 1 crore – you can buy 2 policies of 50 lakhs each as it provides flexibility to discontinue one policy should your insurance needs reduce over time.Of course it will attract slight additional premium but the flexibility makes the additional cost worth it.

You should make sure at time of buying the policy :

Ensure that you read and answer all the questions correctly and accurately to the best of your knowledge.
Ensure that you have disclosed all material facts to the Company. In case of any doubt as to whether a fact is material or not, the fact should always be disclosed.
Ensure that all the documents submitted by you (E.g. Age Proof, Income Proof etc) along with the proposal form are genuine
Go through the copy of your signed proposal form enclosed along with the policy document
Review and ensure that all the questions have been answered correctly and accurately to your best of knowledge
In case you come across any discrepancy, please consult with point of contact from insurance company.
Online term plans where a customer buys the policy directly from the company are up to 35% cheaper than their offline versions. By removing the intermediary between customer and the company the world wide web has brought down the price of the cover.

Term plans are especially beneficial for young people with dependents. Low premiums set you free to invest in high-growth instruments such as equity-linked savings schemes (ELSS) initially, which also provide tax breaks.

Brokers not keen on term plans :
Agents are often not keen on selling term plans since they earn much less commission from them than, say, unit-linked plans (Ulips). Since term plans have no investment component, the lowest premium plan qualifies as the best. So be careful when you have approached a broker for insurance needs.

Make sure you don’t shun pure life cover just because you won’t get your money back. It is the best gift you can give to your dear ones. Get yourself ‘Term Plan-ed’ today and keep your investments and insurance separate.

Youngsters in their 20s or early 30s please remember – Every working professional in their 20s or early 30s must have received a call from and insurance company or an agent trying to sell its policy.Point is that insurance in the early years of professional life may sound a waste of money when other lifestyle and personal expenses takes priority. With a change in life style of young professionals which includes long working hours , high stress levels , alarming rise in lifestyle related diseases like diabetes , obesity and cholesterol – insuring oneself becomes as essential as other expenses. Investing early in insurance will also help you save tax and instill in you the habit of saving and financial discipline that ensures peace of mind in long run. So, if you are a young professional and have not insured yourself yet , the next time you come across any material related to insurance , give it a serious thought.

Fixed Maturity Plan and the Direct Taxes Code (DTC) Effect

Fixed maturity plans (FMPs) have been very popular with investors because they are more tax efficient than FD’s.
If the FMP term exceeds one year , the income is treated as long term capital gains and taxed at flat 10% or 20% after indexation. In case of fixed deposits , the interest earned is clubbed with the income of investor and taxed at the normal rate. That is why a 370 day FMP is the most common maturity in this category.

But this is set to change if Direct Taxes Code (DTC) replaces the Income Tax Act from April 1 , 2012. FMPs will lose some of the tax advantage they enjoy under the current tax regime.The DTC will not make a distinction between long-term and short term capital gains form debt mutual funds. All gains will be added to income of investor and taxed at normal rate applicable to him.This means if you buy a 370 day FMP today , the gains will be taxed at same rate as the interest earned on Fixed deposit. So if you want to invest for a period of one year right now , a fixed deposit might be a better bet , given the post tax returns will more or less the same.

There’s another way in which the DTC queers the pitch for FMPs. As mentioned earlier , long term capital gains from debt funds are taxed at flat 10% or 20% with indexation. Indexation takes into account the inflation during the holding period while calculating the cost of acquisition of an asset. For instance , if an asset was bought in March 2010 (financial year 2009-10) and sold in April 2011 (financial year 2011-12) , it would be eligible for inflation adjustment for two years. This will change under DTC. For an investment to quality for long-term capital gains, the asset has to be held for at least one year from the end of financial year in which it was bought. So in you invest in FMP right now , one year period will start from April 1 , 2012 and term should extend till March 31 , 2013 for the income to be treated as long term capital gains.
Indexation benefits will be available only if gains are long term.Obviously a 370 day FMP won’t make the cut if you buy right now.But it will do so if it is bought in the last week of financial year.If you buy in March 2012 , the FMP matures in April 2013 , the gains will be long term capital gains. Given this new rule for calculating the holding period , an investment will have to be held for terms varying from between a little over a year to up to two years to quality fo long term capital gains treatment.If you want to invest now and are looking for indexation benefits , going for a 735 day plan can be an option. A 1,100 day plan will fetch you double indexation.Though such long maturities are rare right now , mutual funds are likely to launch more such plans once the DTC proposals become a law.There’s another change in indexation rules.Under DTC , long term capital gains after indexation will be taxed at the marginal rate of tax.So if you fall in 30% tax bracket , the long term capital gains after indexation will be taxed at peak rate.

So in brief things to keep in mind:

- Under DTC , there will be no difference on long term and short term capital gains from debt funds.Gains will be added to income and taxed at normal rate.

- To qualify for long term capital gains , the asset will have to be held for at least one year from the end of financial year in which it was bought.

-If you invest in a 370 day FMP right now , it won’t get benefit of indexation.But it will do so if it is bought in the last week of the financial year.
-Long term capital gains after indexation will be taxed at the marginal rate.The tax will be 30% in the highest tax bracket.

Free Financial Planning application for iPad /iPhone

Few Financial Planning application for iPad/iPhone

Best Free Financial Planning apps for iPad that let you do all financial planning on iPad. These Top free financial planning iPad apps that will keep you on top of your finances.They are highly effective and above all, totally free. All these financial planning apps work on iPhone as well.

CashFlow

CashFlow is Free app for iPad that lets you manage all your expenses. Proper tracking and management of your income and expenses forms the basis of proper financial planning.

With CashFlow app for iPad, you can promptly record your daily cash receipts, expenses and even your ATM balances, thus making it possible to track historical cash flow information.

CashFlow for iPad also gives you the opportunity to adequately describe the nature of these transactions and export them in CSV and OFX format over a course of 30, 60 or 90 days as desired.

This app has an in-built calculator to help you track these cash flows and determine balances in a simple manner. For multi-national usage, CashFlow free for Ipad is available in several languages including English, Japanese, Korean, Spanish and Russian among others.

Suffice it to say that with CashFlow free for iPad, you will not need to see your bank statement before being able to make reconciliations on a monthly basis. Also you will be able to
effectively manage your finances and track how much you have spent in real time terms.

Bloomberg app for iPad
To aid cash management and what exactly you spend your money on, you need to have the best and reliable financial information at your finger tips. Bloomberg for iPad is one great free financial app that opens you to real time financial information globally.

According to some analysts, Bloomberg for iPad is the “most trusted source for financial information on the iPad and it is loaded with tools to help you analyze the world’s markets in real time”. With Bloomberg for iPad you get stock information across several markets, breaking financial news, industry information and trends etc.
Also, you can create a specific list of stocks and market you wish to follow on Bloomberg for iPad, including RSS feeds for specific financial news across the world. This app can be freely downloaded from the Apple iPad App store anytime.
Jumsoft Money for iPad
Jumsoft Money for iPad is another free financial management app for iPad. It meets accounting needs of home businesses, small businesses, individuals, associations, clubs, and more. This iPad app also lets you set and manage budget, manage multiple accounts, and see all types of reports about your money.
Easy Books for iPad
Easy Books for iPad is about the best, and also free iPad app that serves as a fully fledged financial accounting module. It is ideal for small businesses and independent consultants/service providers who need to generate financial reports in real time.

Easy Books for iPad is also a fully integrated double entry accounting package that lets you input an unlimited number of transactions, including adding several features from compatible apps as you need them. In a way, Easy Books for iPad can be described as a financial Enterprise Resource Planning application, meaning you have access to all financial reports regardless of location and time.

Easy Books for iPad makes it possible to keep track of all your accounts including receivables, purchases, sales, assets, depreciation etc. Major financial reports that can be spooled from this app include you profit and loss statement, trial balance, aged debt analysis, and cash flow statement among others.

The capabilities of Easy Books for iPad are almost limitless as you can add accounts and report heading, including transaction lines without effort. Before you purchase that new accounting software for your business, visit the Apple iPad app store and check out a free downloadable version of Easy Books for iPad.
MoneyDance for iPad
MoneyDance is another free money management app for iPad. It lets you quickly enter your expenses while you are on the move. It easily syncs with desktop version of MoneyDance, so you can easily manage you finances on both ipad, as well as your PC.

MoneyDance uses strong encryption to ensure that your data is secure when you try to sync your transactions on your local wifi.

Note: Hope Lady Gaga,Justin Bieber,Shakira,Eminem,Kesha Rose Sebert,Rihana and all use this apps and make this popular.

Term Insurance and its importance

What is Term Insurance?

Term Insurance is a form of Life Insurance which provides a stipulated cover for a certain period under contractual agreement. Simply put, Term Plan is financial cover in case if the insured dies; death claim is given to the beneficiary.

Why Term Insurance?

A person should get term insurance if he has any dependents, it could be children, wife, parents. Term plan also protects your dependents against any loan payments or liabilities you might have. With a nominal premium, you can get excellent coverage. Term plan is certainly the best means to financially shield your family.

Insurance is promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest.

DREAMS: Compute your Tax Liability-Tax Calculator.

DREAMS: Compute your Tax Liability-Tax Calculator.

Basics of a Health Insurance Policy

You really want to get your health insured but you dread the claims processes, the kind of documentation required, the uncertainty associated with reimbursement, the complexities surrounding pre existing diseases and the endless waiting period associated with buying a health insurance policy. We simplify facts for you, and answer some of the most basic questions that have been troubling you….

What is Health Insurance?
Health Insurance is the medical insurance provided to you by an insurance company, wherein it reimburses the medical expenses you incur as a result of your valid hospitalization. All you do is to pay a certain amount (subject to conditions) once each year, known as premium, which keeps your health insurance policy active. So, health insurance helps you get a good medical treatment and a smooth hospitalization recovery.

Who needs Health Insurance?
Well, a better question would be, ‘Who does not need Health Insurance?’ and the answer is everybody needs it, but few are aware and realize its importance. While you may not suffer from any ailments and this may give you the impression that you may never need to be hospitalized, life may surprise you any moment with accidents and illnesses. And if you do get hospitalized, then over-the-top healthcare expenses may be difficult to pay from your own pocket.

What does Health Insurance cover and what does it exclude?
As health insurance in India is synonymous with “hospitalization”, your health insurance policy will mainly cover hospitalization expenses provided, you undergo treatment in the hospital for at least for 24 hours. The expenses for hospital bed, nursing, surgeon’s fees, consultant doctor’s fees, cost of blood, operation theatre charges are all covered. While, certain diseases that are specified under the policy’s terms and conditions may be excluded from coverage or may be covered only after one or two years of the policy issue date. Also, cosmetic treatments, and those that do not involve hospitalization, are not covered.
What are pre-existing diseases?
Pre-existing diseases are those that a person may have suffered from, or sought treatment for, or even such a disease which he may have had, but may not have been aware of, before the date of issue of the Health Insurance policy. Normally there is a waiting period of two to four years before which preexisting diseases are covered under health insurance policies.
What’s the difference between individual insurance policy and family floater policy and which one is better?
An individual health insurance policy means that a particular policy can cater to one particular individual only, namely the holder of the policy. So, in case the individual has taken a policy for a coverage amount of 1,00,000, then he will be covered for one lakh only, and in case the expenses go over this limit, he would have to pay by himself. As against this, with a family floater policy, if a family of three is covered for Rs 3,00,000 in all, then each member is eligible to use the entire amount of three lakhs as hospitalization expenses. Hence, a family floater policy gives you a benefit of additional coverage, which is absent in case of individual health policies.
The disadvantages of a family floater policy
The family floater plan offers flexibility in terms of utilizing the overall insurance coverage among the family as a group. However, there are certain clauses which you need to be aware of. First, the policy will be renewed only till the senior most member reaches the maximum age of renewability allowed by the particular insurance company, after which other family members will need to take a fresh policy without having the benefit of their claim history and pre-existing disease coverage that comes from continuous renewal of the policy. Second, children who reach 25 years of age, will need to buy a separate policy for themselves without the benefit of the earlier continuous coverage that they have got under the family floater plan. Third, in case of an accident or any kind of illness, where all the members have to hospitalized, the cover amount may be insufficient.
When is the right time to buy a health insurance policy?
It is better to be insured at an early age when your chances of being prone to ailments and diseases are less. This can be advantageous, if you buy health insurance at a time when you are healthy, your years will be claim free and you will be eligible for a discounts in premium rates, also your chances of getting stuck with a pre-existing disease and being denied claim, would be nil. Hence, it is advisable to buy a policy before you enter late 30s. Go for an independent health insurance policy even when you are covered by your employer, so that you’ll be sufficiently covered even if you change your job. Buying a health insurance policy, just when the disease strikes is a bad, irresponsible move, which may not even guarantee reimbursement.
What is cashless facility?
Cashless Service is a service through which all the medical bills are paid by the Insurance company directly to the hospital, and the insured has not to pay anything at all. Basically this service is only applicable in hospitals which are in the insurance company’s “network hospitals” list. Every insurance policy has a list of hospitals where the insured can avail of this service. The policy holder simply has to call the toll free number present on the Health Card and then the co-ordination between the hospital and the company takes place.
Does health insurance have a tax benefit?
The maximum deduction for an individual, spouse and children is Rs 15,000 per year. Senior citizens (65 years old or higher) get a tax exemption upto Rs 20,000. The premium is allowed as deduction from the total income of the assessed. Hence if you are paying medical premium for yourself, your family and parents you can get a tax benefit up to Rs. 35,000.
How do I claim Health insurance?
You can make a claim in two ways: Firstly, if the nursing home or the hospital you get treated in, is in the “network hospitals” list and provides cashless service, then you need to give details of your policy to the nursing home and the nursing home will claim the money directly from the insurance company. You, don’t need to pay the bills in this case.

But if the nursing home does not provide cashless service, then you need to pay the medical bills first and later get the money reimbursed from the insurance company by submitting the relevant documents and the original bills and receipts. The insurance company will then refund the money to you.
What are the different Waiting periods associated with a Health Insurance policy?
Firstly, there is a two-to-four year waiting period before which for pre existing diseases can be covered under the health insurance policy. Secondly there is a 30 day waiting period from the date of issue of the policy, within which you will not be reimbursed the hospitalization expenses, unless, the treatment refers to accidental injuries. Thirdly, certain specific diseases are not covered for certain periods of time, varying from policy to policy, for instance, hypertension may not be covered for two years from the date of policy, while joint replacement may not be covered before four years from the date of issue of the policy.

TYPES OF INSURANCE

Insurance can be termed as a form of risk management which is mainly used to protect an individual against the risk of prospective financial loss, if any. Insurance can be used as a tool to shield an individual against potential risks like travel accidents, death, unemployment, theft, property destruction by natural calamities, fire mishaps etc.

Different types of insurance is used to cover different properties and assets such as vehicles, home, health care etc. Basically, an insurance policy can also be known as a protection net which secures you from any financial losses in future.
All you have to do is pay the insurance agencies a specified amount every month, known as premium, so that they can take care of you by providing you financial back up in case of a sudden health emergency or a fatal incident.

There are two ways for getting an insurance done.

One way is to visit an agent and consult him for the best option you can avail for your situation. And then, trust him/her for their suggestion on the type of insurance they feel is right for you.

The other way is to research and choose on your own, the type of insurance which will be best suited for your situation. You should research the market as well as the net, to look for the best insurance companies, and further more, the most suitable type of insurance that they offer.
Also explore the various types of policies which are available to you in the market, and then compare to decide which one to choose finally.
Different types of insurances.
Insurance is Mainly two category 1 General insurance 2 Life insurance. but based on services we can divided in following 5 types

Health Care Insurance

With such high medical and health care costs these days, it’s hard to even think about visiting a doctor. But what about an unexpected mishap or an unforeseen disability or attack, where the potential medical bills could shoot up to a sky? Where would you get so much money from?

These are exactly the situations where you feel you had a security, something which could come to your rescue and save you from such financial crisis. While some companies do provide its employees with health insurance, for others, this is a must.
Especially for the aging couples, who have a comparatively more chances of needing emergency bill money. The health insurance does it all, so that they do not have to worry for the huge payments at the last minute.
A health insurance can cover all from a routine immunization to a major illness.

Life Insurance

Loss of a family member is a catastrophe which glooms a family’s life. But even more tragic is the death of a sole bread earner for the family, who then has to go through the pain of losing their loved one, as well as the financial loss putting their survival in jeopardy.

This financial hardship due to a sudden death of a family member or a disability resulting to a loss of job or inability to work can be avoided to a great extent by taking up a life insurance policy.
A Life insurance or disability insurance covers such losses and pays a family, compensation to restore the earnings lost by them due to a sudden death or disability.

The monthly premiums for a life insurance are generally based upon the age, health, and occupation information of the applicant, in addition to the total benefits to be paid to him for his policy.

Home Insurance

Real estate property and hard assets are subject to accidental risks like theft, destruction due to natural disasters or fire accidents etc. with such huge investments gone into buying a real estate property like your home or office, the risk involved is a loss of large amount of money.

Home and property insurance helps you in managing and protecting against these risks. The cost of a real estate property and its insurance is mostly based upon the worth of the already insured hard assets and also the location in which the assets are situated.

Travel Insurance

This is intended to cover any of the financial or any other losses which were incurred by the insured while traveling, be it nationally or internationally, such as mountain trekkers, cruise travelers etc.

Auto Insurance

Any vehicle on road, no matter how safe its driver is, is bound to meet with an accident or two, which may leave it with just a few scratches, or crash it up totally. Most countries today require you to have an auto insurance while on road in your vehicles.

If you have an accidental car crash, a total repair could cost you a fortune. On the other hand, a little scratch on your Land Cruiser might also soar up your bills to a high.
Whether or not you need an auto insurance mostly depends on the type of car you own.

If you have an expensive car and a little repair could wipe you out financially, you should very well go in for a buying an all-inclusive and crash insurance which could protect you against any and every harm done to your vehicle.