Is Your Residential Status Impacting Your Investments?
To maximize your returns, understand how your residential status impacts.
Understanding how your residential status impacts your Indian investments is crucial for smart financial management.
In this newsletter, we break down the essentials, offering clear guidance on what steps to take when your status changes.
Why this matters: Your residential status directly affects how you manage investments like mutual funds, stocks, and more. Ignoring these changes can lead to complications.
Act Fast: Notify relevant institutions immediately upon any change in your residential status.
Impact of Residential Status on Indian Investments
Mutual Funds
👉 Resident Indian to NRI: Update your KYC with the KRA, convert your bank account to NRO, and check if the fund house accepts investments from your new country of residence. Consider opening an NRE account for foreign earnings or an NRO account for Indian income.
👉 NRI to Resident Indian: Convert your NRO account back to a resident account, or transfer funds from NRE/FCNR to an RFC account. Update your KYC and bank details with the KRA. Enjoy unrestricted investment in Indian mutual funds!
Stocks
👉 Resident Indian to NRI: Close your resident demat account and open an NRI demat account. You'll need to provide proof of purchase (contract note) for transferring securities. A PINS account is mandatory for repatriating investments made as an NRI.
👉 NRI to Resident Indian: Close your NRI demat account and open a resident demat account. Securities will be transferred as per SEBI guidelines.
Bank Fixed Deposits (FDs)
👉 Resident Indian to NRI: Convert your resident FD to an NRO deposit account. Submit an application with your details to the bank. Explore the benefits of overdraft facilities, auto-renewal, and potential tax benefits (under the old tax regime).
👉 NRI to Resident Indian: Convert your NRO/NRE FD to a resident bank account. Submit an application with PAN card, KYC documents, photograph, FATCA/CRS declaration, and a self-declaration of your resident status. Be aware of premature closure penalties.
National Pension Scheme (NPS)
👉 Resident Indian to NRI: Contact your POP service provider/Nodal Office to update your status. Continue investing in Tier 1 with an NRE/NRO account. Tier 2 investments are treated as Tier 1.
👉 NRI to Resident Indian: Update your bank details to a resident Indian account. You can now invest in Tier 2.
Public Provident Fund (PPF)
👉 Resident Indian to NRI: Inform the relevant department within one month and provide NRO bank details. You can maintain the PPF until maturity but cannot extend it. Proceeds are transferable only to NRO accounts.
👉 NRI to Resident Indian: You cannot open a new PPF account as an NRI. Upon returning to India, update your residential status and convert your bank account to continue contributing or extending the maturity.
Sukanya Samriddhi Yojana (SSY)
👉 NRI: You cannot open an SSY account. If an existing account holder becomes an NRI, inform the bank within one month. The account will be closed and ineligible for interest.
LIC/Life Insurance
👉 Resident Indian to NRI: Continue paying premiums through approved channels. Inform your LIC branch about your status and overseas address. Submit an NRI questionnaire form.
👉 NRI to Resident Indian: Continue holding your policy. Inform your LIC branch to pay premiums in Indian currency.
Sovereign Gold Bonds (SGBs)
👉 Resident Indian to NRI: You can continue holding SGBs until maturity.
👉 NRI to Resident Indian: NRIs, OCIs, and PIOs are restricted from investing in SGBs. The Union government discontinued the SGBs in 2025 owing to the high costs.