Repatriation: NRIs can repatriate the principal amount and the interest earned on bonds and debentures held under their NRE accounts. Repatriation of funds from NRO investments may have specific guidelines and limits set by the Reserve Bank of India (RBI).
Credit Ratings: Before investing in bonds and debentures, it’s important to review the credit ratings assigned by rating agencies. Credit ratings reflect the issuer’s ability to meet its debt obligations and can help assess the creditworthiness and risk associated with the investment.
Interest Income: Bonds and debentures provide fixed or floating interest income to investors. The interest rates and payment frequencies vary depending on the terms of the instrument. The interest earned is subject to taxation in India, and NRIs should consider the tax implications and any applicable Double Taxation Avoidance Agreements (DTAA).
Secondary Market: Bonds and debentures can be traded in the secondary market before their maturity date. NRIs can buy and sell these instruments on stock exchanges or through online trading platforms, providing liquidity and an opportunity to exit their investments if needed.
Risk and Returns: Bonds and debentures carry different levels of risk depending on the issuer’s creditworthiness, the tenure, and the prevailing interest rate environment. Investors should carefully evaluate the risk-return profile of the instruments before investing.
Regulatory Compliance: NRIs should ensure compliance with the regulations set by the RBI and the Securities and Exchange Board of India (SEBI) while investing in bonds and debentures. It’s important to stay updated on any changes in regulations and adhere to reporting requirements related to these investments.