NRI shifting back to India? How to manage assets during relocation

Karan Kapur is preparing to return home after a 10-year stint abroad. He plans to set up a business in his hometown, so that he can be close to his extended family. His wife and children are apprehensive about the move, but are going along with the plan. Kapur wants to know how he should deal with his global investments and wealth, which include bank deposits, equity shares, retirement savings, mutual funds, gold and a house abroad.

Kapur should rethink his decision to wind up everything when he makes the move. It is not uncommon for NRIs who return to India to consider moving back within a short time. Although the entire exercise costs a lot of money, some returning families fail to adjust well.

Until he is completely sure that everyone in his family has comfortably settled into the new environment, Kapur should not consider his move to be final. The Indian rupee is still not convertible on capital account. This means that Kapur will be able to move money out of India only within the limits and rules prescribed for external repatriation.

Though these rules have been relaxed over a period of time, they still apply. Regulations allow Kapur to retain his foreign currency assets in foreign currency for a period of time after moving back. He should consider that option and consult his chartered accountant, and refrain from converting his global assets into Indian rupee assets in a hurry.

Financial planning decisions have to be aligned to personal needs. Kapur should be able to visualise what his financial goals for the short and long term are. If he plans to send his children abroad to study, he will need to pay in foreign currency, for which the assets he holds abroad may come in handy. He has to plan the utilisation of his assets and take a call on their performance before making strategic decisions. He should desist from making long-term decisions based on immediate tactical gains on his investments. Earning a steady rental income on his home abroad might be a better choice for stabilising his income in India. Kapur should be aware of the fact that he can hold on to his global assets for a while, even when he settles down in India, and make his decisions accordingly.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)