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Investing abroad is no cakewalk

The doubling of the existing limit for individual investments and remittances abroad to $100,000 (Rs 45 lakhs) per annum is unlikely to increase these substantially in the near future, given that the rules and regulations for such operations are yet to be announced.

However, several leading foreign banks are waiting in the wings for taking a plunge once the norms are announced.
“HSBC Investment Advisors is talking to investors, so that we can start operations once we get the green signal,” said Nicholas Winsor, Head of Personal Financial Services, HSBC India. “We are awaiting for some clarifications,” another foreign banker who preferred anonymity, said.

Initially individuals were allowed to invest up to $25,000 per annum only in fixed deposits abroad. The limit was later hiked to $50,000, but no limits were announced for asset allocation among the several investment instruments available overseas.

Nipun Mehta, co-founder and CEO of Unitis Tower Wealth Advisors, said, “These operations call for global systems and processes, besides expertise of local markets. Foreign banks will be in a position to offer these services backed by brand equity.”

“We are already operating in some Asian and European markets, and in the US in the form of local and global mutual funds. Mutual fund route offer the best means of taking care of accounting and taxation issues specific to each country, besides offering investment advisory,” Winsor added.

Though individuals were allowed to invest abroad a couple of years back, there are no specific figures on such investments to cite. Recently, Fidelity Mutual became the first fund in India to launch a scheme for investing abroad.

“Foreign investments from India did not pick up due to lack of institutional mechanisms that channel and facilitate such investments. Besides, Indian markets have been offering better returns than several other markets,” Anurag Mehrotra, Head-Wealth Management of Edelweiss Securities.

The new limit enables a family of four to invest $400,000 per annum. However, there are some high networth individuals (HNIs) who are investing abroad directly.

Source : Hindustan Times

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