What are NRI Bonds?

by Manshu on September 11, 2018

in Investments, NRI

The Rupee has fallen significantly this year, and with Friday’s Current Account Deficit data release – it tumbled to a new low of 72.63 to a dollar today.

There are reports of the government thinking about issuing NRI bonds to help with this depreciation and it seems like the government will be forced into action soon.

While there aren’t any details available on how NRI bonds will be issued (if at all they are issued) – from previous times we know that the branches of Indian banks outside India will allow NRIs to deposit their dollars, which can then be transferred to the Indian branches thereby helping with the Rupee slide.

For their trouble – NRIs will get a better interest rate than their domestic banks, and usually an ability to convert their Dollars into Rupees back home. There will likely be a lock in period of 3 – 5 years in the scheme, and history is any indicator it will very likely bring in good inflows from NRIs because the RBI was able to raise $30 billion from a similar NRI bond scheme in 2013. 

 

{ 8 comments… read them below or add one }

Vasu September 11, 2018 at 12:55 PM

Dear Mr. Shiv,

Good information. Kindly update in case of any further development on such bond issue

Thanks

Reply

Shiv Kukreja September 11, 2018 at 11:19 PM

Dear Mr. Vasu,
This post has been shared by Manshu and it is a great news for this blog and its readers that he is planning to restart blogging. Cheers! 🙂

Reply

hkinvestor September 12, 2018 at 1:38 PM

Hi Manshu, what makes this NRI bond different from FCNR deposits? Both these are in US Dollar denominated. NRI Bonds are only attractive if they offer higher return than FCNR (banks are offering as much as 3.8% in USD for FCNR deposits at present). Will issuer of these bonds be Govt of India itself?

Reply

Manshu September 14, 2018 at 5:05 AM

There aren’t any details out yet, need to wait till the issue is actually out.

Reply

Sandeep October 15, 2018 at 3:01 PM

Hello Mashu,
Thanks for throwing some light on NRI bonds. I would like to request more details on how the NRI bonds were issued last 3 times. Also I have a question that if Only USD holders will be benifited or any foreign corrency like Euro also can benifit from this.
Thanks
Sandeep

Reply

StockJio October 16, 2018 at 7:43 PM

any relation between dollar and nri bond

Reply

Patient Engagement Solutions October 18, 2018 at 6:33 PM

Nice post about the NRI bonds, thanks for sharing…

Reply

satya pal singh October 23, 2018 at 4:12 PM

NRI, from Indonesia. Please update on NRI bonds issues. I am waiting to invest a sum of 250,000.00 USD immediately. available with SBI in India

Reply

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