Despite relaxed rules on overseas investing, India’s quickly growing population of millionaires are choosing to stay home when it comes to investing, according to Dow Jones. Citing less than murky rule changes, and an attractive home market, Indian investors remain relegated mainly to real estate and currency abroad. “The awareness of international markets is very low,” said Sudip Bandyopadhyay, chief executive of Reliance Money in Mumbai. “Even the fact that it is possible to invest abroad is not widely known,” he said. The confusion is not only among investors, but at some bank branches as well. The Reserve Bank of India allows individuals to remit up to $100,000 abroad, up from the $50,000 limit set in October 2006. Analysts there are slowly increasing the investment options available, although the central bank recently notified personnel that remitting to foreign exchanges to cover margin calls is prohibited. Anjani Sinha, managing director and chief executive of the National Spot Exchange, a subsidiary of the Multi-Commodity Exchange of India, said the restrictions give “the flavor of a controlled economy in which the state decides where a citizen should invest money and where he should not.” Whether it’s an uncertainty about regulations that is keeping investors home is unclear, since equities and real estate values remain extremely strong. In fact, Indian markets have been attracting their own share of offshore attention, with $8 billion in foreign investments last year, and almost $6 billion in 2007, to date. “We have been selling the India story heavily. Then, as an adviser, you tell the investor to put money outside. Investors feel there is a disconnect,” said Rajan Krishnan, head of asset management business at Principal Pnb Asset Management Company. Still, some companies, like Reliance Money, are looking beyond India’s borders to the Nasdaq, the Nymex and the Heng Seng. Reliance works with London-based CMC Capital Markets, allowing Indian investors to trade directly on the U.K. company’s platform. The Reserve Bank is now looking into opening a London desk, citing increased interest in investments in stocks and real estate in the U.K. A working group created by the Association of Mutual Funds in Indiahas been lobbying the central bank to allow investment in overseas mutual funds under the $100,000 cap. Right now, investors looking to mutual funds must invest in the local currency. “If we get higher limits, we should be open to launching funds that invest 100% in overseas equities,” said Vivek Kudva, president of Franklin Templeton Investments India. Funds are only allowed to invest $200 million in overseas stocks. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
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