Understanding Overseas Direct Investment (ODI) and Latest RBI Guidelines for Indian Investors

by Deepak Madan | Mar 1, 2025 | Blog

Investing in companies or assets outside of India is known as overseas direct investment. Overseas Direct Investment (ODI) allows Indian residents, including individuals, firms, and companies, to invest in foreign businesses or projects. What is the limit of ODI investment? Indian entities can invest up to 400% of their net worth abroad, as per RBI regulations.
Who is eligible for ODI? Resident individuals, partnership firms, limited liability partnerships, and companies can undertake ODI, provided they meet the requirements.
What is overseas direct investment? It is a means for Indian entities to expand globally, establish a lasting interest, and tap into international markets.

The following three categories of investments make up an ODI:

1. Purchasing equity in any unlisted firm or subscribing to a foreign entity’s memorandum of association.
2. An investment of 10% or more of a stated foreign company’s paid-up equity capital.
3.  An investment that represents less than 10% of a stated foreign company’s paid-up equity capital shall be controlled.

Who is eligible to make ODI?

Investments in entirely owned subsidiaries or joint ventures can be made by public and private limited corporations, partnership companies registered under the Indian Partnership Act of 1932, and limited liability partnerships registered under the LLP Act of 2008. Additionally, residents are able to invest abroad. The LRS allows for investments in mutual funds, foreign securities, real estate, and other assets totaling up to USD 250,000 every fiscal year. The investment must abide by the RBI’s reporting guidelines, which include submitting the appropriate paperwork to the RBI and authorized dealers.

Please note that Sole proprietorship and unregistered partnership entities are not eligible to make ODI in WOS or JVs under automatic route.

Mode of ODI payment?

1. Payment mode: The remittance for overseas investments should be made through an Authorized Dealer (AD) bank, which is a bank authorized by the RBI to deal in foreign exchange transactions.
2. Purchase of foreign currency: The foreign currency required for overseas investments must be purchased from the AD bank at the prevailing market rate.
3. Escrow accounts: The RBI may permit the use of escrow accounts or special accounts in specific cases, subject to certain conditions and safeguards.
4. Routing transactions: All transactions related to overseas investments must be routed through the same AD bank, ensuring compliance with the guidelines issued by the RBI.
5. ODI in the form of cash is not permitted.
6. Indian entities may make remittances to their office or branch abroad only for normal business operations. Hence, No ODI is permitted for investment into the branch offices abroad

Knowledge of the Automatic Route

Any monetary commitment up to USD 1 billion in a financial year does not require prior RBI clearance if the Indian party’s entire commitment falls within the acceptable limit under the Automatic Route (i.e., falls within 400% of net worth as per the most recent audited balance sheet).

The Role of Authorized Dealer Category – I Banks

All transactions related to overseas investments must be routed through the same AD bank, ensuring compliance with the guidelines issued by the RBI.

Components of Financial Commitments

Financial commitments in overseas JVs/WOS consist of equity shares, Compulsorily Convertible Preference Shares (CCPS), other preference shares, loans, guarantees (excluding performance guarantees), and bank guarantees (backed by a counter guarantee/collateral by the Indian party).

1. 100% of the number of equity shares and/ or Compulsorily Convertible Preference Shares (CCPS);
2. 100% of the number of other preference shares;
3. 100% of the amount of the loan;
4. 100% of the amount of guarantee (other than performance guarantee) issued by the Indian Party;
5. 100% of the amount of the bank guarantee issued by a resident bank on behalf of the Indian Party’s JV or WOS, provided that the bank guarantee is supported by a counter-guarantee or collateral.
6. 50% of the amount of the performance guarantee issued by the Indian Party, with the condition that prior Reserve Bank approval must be obtained before sending money beyond the financial commitment’s limit if the outflow resulting from the performance guarantee’s invocation causes it to go over.

Conditions for Investments and Financial Commitments under automatic route

Investments and financial commitments in overseas JVs/WOS must adhere to specific conditions:

1. The Indian party/entity may extend loans/guarantees only to overseas JVs/WOS in which it has equity participation. Proposals for financial commitments without equity contributions may be considered by the RBI under the approval route.
2. Indian parties should not be on the RBI’s caution list, defaulters list, or under investigation by any investigation/enforcement agency or regulatory body.
3. Share valuation must be performed by a Category I Merchant Banker registered with SEBI or an Investment Banker/Merchant Banker outside of India registered with the relevant regulatory authority in the host country for investments exceeding USD 5 million in partial or complete acquisitions.
4. When an investment is made through a share swap, the valuation of the shares must be performed by a Category I Merchant Banker registered with SEBI or an investment banker outside of India registered with the relevant regulatory body in the host country.
5. In cases where a registered partnership firm invests in an overseas JV/WOS, individual partners may hold shares on behalf of the firm if the host country’s regulations or operational requirements warrant such holdings.
6. Indian parties may acquire shares of a foreign company in exchange for ADRs/GDRs, subject to specific conditions.
7. Investments in Nepal are permitted only in Indian Rupees. Investments in Bhutan can be made in Indian Rupees or freely convertible currencies. All dues receivable on investments and their sale/winding-up proceeds must be repatriated in freely convertible currencies.
8. Investments in countries identified by the Financial Action Task Force (FATF) as “non-cooperative countries and territories” are not permitted. Investments in Pakistan are permissible under the approval route.

Methods of funding for overseas direct investment include:

1. Drawing foreign exchange from an AD bank in India
2. Capitalizing exports
3. Swapping shares
4. Utilizing proceeds from External Commercial Borrowings (ECBs) or Foreign Currency Convertible Bonds (FCCBs)
5. Exchanging ADRs/GDRs issued by the relevant schemes and guidelines
6. Using balances held in the EEFC account of the Indian Party
7. Proceeds from foreign currency funds raised through ADR/GDR issues.

The obligation of Indian parties (IP) and resident individuals (RI) after making an overseas direct investment:

1. Receive share certificates or other evidence of investment within six months (or a period permitted by the Reserve Bank) from the date of remittance, capitalization, or permission for capitalization.
2. Repatriate all dues from the foreign entity, such as dividends, royalties, and technical fees, within 60 days of falling due (or a period permitted by the Reserve Bank).
3. Submit an Annual Performance Report (APR) in Part II of Form ODI for each JV/WOS outside India by December 31 every year, based on the audited accounts from the preceding year, along with any other prescribed reports or documents.

Additional points to note:

a. The designated AD bank must monitor the receipt of documents and ensure their authenticity.

b. Certification of APRs by a Statutory Auditor or Chartered Accountant is not required for resident individuals; self-certification is acceptable.

c. If multiple IPs/RIs have invested in the same overseas JV/WOS, the one with the maximum stake is responsible for submitting the APR. Alternatively, stakeholders can mutually agree to assign this responsibility to a designated entity.

d. Reporting requirements, including submission of APR, also apply to investors in unincorporated entities in the oil sector.

e. If the host country’s law does not mandate auditing of JV/WOS books, the APR may be submitted based on un-audited accounts if certain conditions are met (e.g., certification by the Indian Party’s Statutory Auditors, adoption and ratification of accounts by the Indian Party’s Board, and not being located in a country under FATF observation or requiring enhanced due diligence).

f. All Indian businesses that have received or made Foreign Direct Investment (FDI) in the past two years must submit an annual report on foreign liabilities and assets (FLA) to the Reserve Bank of India. Every year, the FLA return has to be emailed by July 15.

Overseas Direct Investment (ODI) by Approval Route:

1. Prior approval from the Reserve Bank of India (RBI) is required for all cases of direct investment or financial commitment abroad that do not fall under the automatic route. To seek approval, applicants must submit Form ODI along with necessary documents through their Authorized Dealer Category – I bank.
2. When evaluating such applications, the Reserve Bank takes into account a number of factors, such as:

• The overseas JV/WOS’s viability;

• The contribution to international trade and benefits to India;

• The financial situation and business history of the Indian Party and the foreign entity;

• The Indian Party’s expertise and experience in the same or a closely related field as the JV/WOS.

3. Investments in energy and natural resources sectors exceeding the prescribed limit of financial commitment will be considered by the RBI. Applications must be forwarded by the AD Category-I – I bank as per the established procedure.

4. Proprietorship concerns, unregistered partnership firms, registered trusts, and societies engaged in manufacturing, education, or hospital sectors may make investments in a JV/WOS outside India with prior approval from the RBI. They must meet specific eligibility criteria and submit an application in Form ODI through the AD Category-I – I bank.

• Proprietorship concerns and unregistered partnership firms must be classified as ‘Status Holders’ as per the Foreign Trade Policy, have a proven track record, and comply with KYC requirements.
• Registered trusts should be established under the Indian Trust Act, of 1882, and have their trust deed permitting the proposed investment.
• Societies must be registered under the Societies Registration Act, of 1860, and have their Memorandum of Association and rules allowing the proposed investment.

5. Through an AD Category-I bank, applications should be forwarded to the Chief General Manager of the Reserve Bank of India’s Foreign Exchange Department and Overseas Investment Division. Before sending the application, together with their feedback and ideas, for consideration, the bank must make certain that the terms and criteria are met.

FAQs:

Q.) What documents are required by banks for making ODI?

1. Form FC as prescribed by RBI
2. Form A2 for trade outward remittance as prescribed by RBI
3. Net worth certificate issued by Chartered Accountant
4. Application for making ODI on the letterhead of the applicant (Format provided by the bank)
5. Board Resolution authorizing proposed overseas direct investment
6. Valuation certificate of the overseas party working by an Indian Chartered accountant or A-class investment banker
7. The latest Audited balance sheet of the Indian Entity
8. Memorandum of Association of Indian Entity (Partnership deed in case of partnership firm) and that of overseas Company confirming the object of establishment
9. PAN of the Indian entity
10. Share sale/purchase agreement (SPA)

Q.) Can proprietorship firms and unregistered partnership firms make ODI under an automatic route?

No, proprietorship and unregistered partnership firms cannot make ODI under automatic route but Proprietorship concerns, unregistered partnership firms, registered trusts, and societies engaged in manufacturing, education, or hospital sectors may make investments in a JV/WOS outside India with prior approval from the RBI.

Q.) What is the difference between a joint venture and a wholly owned subsidiary in the context of ODI?

“Joint Venture (JV)” signifies a foreign body constituted, documented, or incorporated in compliance with the legislation and rules of the host nation wherein the Indian Party invests directly. Whereas “Wholly Owned Subsidiary (WOS)” represents a foreign entity created, registered, or incorporated following the laws and regulations of the host nation, with the Indian Party owning its full capital. So the main difference between the both is that in a Joint venture Indian party do not own 100% shares but in WOS Indian party owns 100% share.

Q.) What does Net Worth Include with context to Overseas Direct Investment (ODI)?

For companies, net worth consists of paid-up capital and free reserves and for partnership firms, it includes Partner’s capital.

Q.) What is the maximum permitted amount for making ODI under the automatic route?

The maximum permitted amount for Overseas Direct Investment (ODI) under the automatic route is up to 400% of the net worth of the Indian entity subject to the maximum amount of USD 1 billion.

Q.) Can we invest in installments for ODI?

No, for ODI investment should be made in a single shot but if it is written in the share sale/purchase agreement that the investment can be made in two or three tranches, then it can be made in installments provided that all installments are made within 180 days of making the first installment.

Q.) What is the time limit for submission of proof/share certificate after making an ODI?

Indian investors must receive share certificates or any other valid documentary evidence of investment in the foreign entity as an eligible form of proof. The time limit for submitting this proof to the bank is within six months from the date of remittance.

Q.) What is the highest amount that a person may invest abroad?

According to the LRS’s maximum authorized limit, a resident individual may invest up to USD 250 000 in the equity shares and mandatory convertible preferred shares of a joint venture (JV) or wholly owned subsidiary (WOS) outside of India.

Q.) Is hedging permitted for overseas direct investment?

Yes, Indian entities are permitted to hedge the risk arising out of currency fluctuation through forwards and options contracts.

Q.) What are the prohibited sectors where ODI is not permitted under automatic route?

1. Real estate: Investments in real estate or the purchase of immovable property, except to carry out business operations or establish a legal presence abroad.
2. Banking: Investments in foreign entities that are engaged in banking or financial services, without meeting the specific regulatory requirements.
3. Sectors subject to international sanctions: Investments in countries or sectors that are subject to international sanctions or embargoes, as imposed by the United Nations, the Indian government, or other relevant authorities.
4. Sectors prohibited by Indian law: Investments in sectors that are explicitly prohibited by Indian law, such as gambling and betting, lottery businesses, chit funds, or Nidhi companies.

Q.) What is the time limit for submission of the Annual Performance Report (APR)?

Indian entities that have made an overseas direct investment must submit an Annual Performance Report (APR) to the RBI, through their Authorized Dealer (AD) bank. The APR provides details about the financial performance of the overseas entity and should be submitted within 6 months from the end of each financial year of the overseas entity.

Q.) Should the Indian entity repatriate the profits and dividends earned from their Overseas Direct Investment?

1. Profits and dividends must be repatriated to India within a reasonable time, as per RBI guidelines. The Indian entity should not delay repatriation without valid reasons, and any delay in repatriation should be reported to the RBI through the AD bank.
2. The profits and dividends can be reinvested in the overseas entity, subject to compliance with the ODI guidelines. However, the Indian entity should report such reinvestment to the RBI through their AD bank.
3. Repatriation of profits and dividends should follow the laws and regulations of the host country and applicable tax treaties between India and the host country.

Overseas Direct Investment (ODI) is crucial for Indian investors seeking opportunities beyond domestic markets. The latest RBI guidelines offer valuable information on regulatory requirements and risk management strategies for venturing into international markets. With a comprehensive understanding of overseas direct investment, Indian investors can navigate the complexities of global markets and capitalize on lucrative investment prospects while mitigating potential risks. Staying abreast of ODI regulations empowers investors to make informed decisions, ensuring the success and sustainability of their ventures abroad. As the global economy continues to evolve, Indian investors can leverage ODI opportunities to diversify their portfolios and achieve long-term financial growth.

For any query and plans related to ODI, you may contact IBRLive and obtain professional consultancy.

Top 10 Cheapest Countries to Travel from India This New Year 2025

by Neha Sharma | Dec 31, 2024 | Blog

Top 10 World Cheapest Countries to Travel from India This New Year 2025
As the New Year approaches, many of us yearn to celebrate in a unique and exciting location without breaking the bank. The world is full of beautiful destinations that offer rich experiences, culture, and adventure at an affordable price. If you’re seeking the best places to visit outside India on a low budget, we’ve compiled a list of the top 10 cheapest countries to travel from India, whether you’re planning a family getaway or a solo trip. When planning your New Year’s travel, consider these budget-friendly destinations for an unforgettable experience. As the New Year approaches, many of us yearn to celebrate in a unique and exciting location without breaking the bank. The world is full of beautiful destinations that offer rich experiences, culture, and adventure at an affordable price. If you’re seeking the best places to visit outside India on a low budget, we’ve compiled a list of the top 10 cheapest countries to travel from India, whether you’re planning a family getaway or a solo trip.

Here’s a guide to some of the cheapest places to travel for New Year’s 2025, focusing on affordable flights, low-cost living, and unforgettable sights. For any currency exchange assistance, feel free to visit IBRLIVE India Pvt. Ltd., especially if you’re traveling from Panipat!

1. Nepal – Explore the Himalayas on a Budget

Nepal is a top destination for Indian travelers due to its affordability and proximity. With beautiful landscapes, rich cultural heritage, and numerous trekking trails, Nepal is ideal for a memorable New Year’s celebration. Indians don’t require a visa to visit, and the cost of living is very low.

Highlights:

• Sightseeing in Kathmandu and Pokhara
• Trekking in the Annapurna range
• Delicious and inexpensive Nepali cuisine

Average Daily Cost: ₹1,500-2,500

2. Vietnam – Rich Culture and Stunning Landscapes

Vietnam offers a wealth of experiences, from bustling markets to serene rice paddies. Cities like Ho Chi Minh City and Hanoi offer an array of affordable accommodations and local foods that make it one of the world’s cheapest countries to travel from India.

Highlights:

• Ha Long Bay cruises
• Ancient city of Hoi An
• Street food tours

Average Daily Cost: ₹2,000-3,500

3. Thailand – The Land of Smiles for a Bargain

Thailand remains an iconic, budget-friendly destination with countless experiences suitable for all travelers. From the beaches of Phuket to Bangkok’s vibrant street life, Thailand offers a rich and affordable New Year getaway.

Highlights:

• Temples and street food in Bangkok
• Island hopping in Phuket and Krabi
• Water sports and nightlife

Average Daily Cost: ₹2,500-4,000

convert Indian Rupee to Thai Baht

4. Indonesia – Beaches and Culture on a Dime

With stunning islands, particularly Bali, Indonesia provides a laid-back yet lively atmosphere for a New Year’s celebration. With numerous budget accommodations, it’s an ideal destination for solo travelers and families alike.

Highlights:

• Ubud’s rice terraces
• Snorkeling and surfing in Bali
• Traditional Balinese ceremonies

Average Daily Cost: ₹3,000-4,500

5. Sri Lanka – The Pearl of the Indian Ocean

Sri Lanka, with its pristine beaches, tea plantations, and ancient ruins, offers a relaxing yet affordable getaway. Indian travelers enjoy easy visa-on-arrival options, making it a hassle-free trip.

Highlights:

• Wildlife safaris in Yala National Park
• Beach relaxation in Bentota and Mirissa
• Cultural tours in Kandy and Galle

Average Daily Cost: ₹2,000-3,500

6. Bhutan – The Happiest Country in the World

Bhutan, known for its stunning monasteries and mountain scenery, is a place that feels magical. Indians enjoy a visa-free stay here, adding to the affordability of exploring this enchanting country.

Highlights:

• Hiking to Tiger’s Nest Monastery
• Exploring the capital, Thimphu
• Traditional Bhutanese cuisine

Average Daily Cost: ₹1,800-3,000

7. Cambodia – Ancient Temples and Natural Beauty

Home to Angkor Wat and many other historical sites, Cambodia is a favorite among budget travelers. It’s affordable for accommodations, food, and local transport, making it one of the cheapest countries to visit from India.

Highlights:

• Angkor Wat complex
• Mekong river cruises
• Cambodian street food

Average Daily Cost: ₹1,500-3,000

8. Malaysia – A Blend of Nature and Urban Wonders

Malaysia offers both the bustling city life of Kuala Lumpur and the tranquil beaches of Langkawi. Its cost-effectiveness and range of attractions make it a desirable and budget-friendly option for Indian travelers.

Highlights:

• Petronas Towers in Kuala Lumpur
• Beaches of Langkawi
• Rainforest hikes

Average Daily Cost: ₹2,500-4,500

9. Egypt – History and Adventure at a Great Price

Egypt is famous for its incredible history, with the pyramids, Nile River, and unique desert landscapes. With budget accommodations and affordable travel within the country, Egypt provides an exotic yet low-cost New Year destination.

Highlights:

• Pyramids of Giza
• Nile River cruises
• Red Sea snorkeling

Average Daily Cost: ₹3,000-5,000

10. Turkey – Where East Meets West on a Budget

Turkey offers stunning architecture, vibrant markets, and breathtaking landscapes at affordable prices. Istanbul, Cappadocia, and Pamukkale are highlights that make Turkey a fantastic New Year’s destination.

Highlights:

• Hot air ballooning in Cappadocia
• Exploring Istanbul’s Grand Bazaar
• Pamukkale’s thermal pools

Average Daily Cost: ₹3,500-6,000

FAQs: Currency Exchange Tips from IBRLIVE

1. Where is it best to exchange currency when traveling?
The best place to exchange currency for travel is through a trusted forex consultant like IBRLIVE India Pvt. Ltd. We offer competitive rates and transparency, and if you’re from Panipat, visit our office to avail exclusive deals before your trip.

2. What is the cheapest way to exchange currency?
Using a reliable currency exchange provider like IBRLIVE is typically cheaper than exchanging at airports or banks. You’ll save more by pre-booking your exchange or checking daily rates with us to ensure you’re getting the best deal.

3. Should I exchange money before I travel?
Yes, it’s wise to exchange a portion of your funds before traveling. This way, you avoid unfavorable rates or hidden fees that may be charged abroad. With IBRLIVE, you can securely get your currency and enjoy peace of mind.

4. Where do I get the best exchange rate?
At IBRLIVE India Pvt. Ltd., we’re committed to providing competitive exchange rates that surpass banks and airport services. We also offer valuable services like video KYC and quick transactions. If you’re in Panipat, don’t miss visiting our office to get the best rates for your holiday!

Conclusion

These top 10 cheapest countries to travel from India offer both adventure and relaxation without the stress of overspending. Whether you’re planning a family trip, a solo adventure, or a romantic getaway, these destinations promise memorable experiences at a budget-friendly price. And for all your currency needs, rely on IBRLIVE India Pvt. Ltd. to get you the best rates before you go, ensuring your New Year travels start stress-free.

Understanding Blocked Accounts for Students in Germany: Why Fintiba is the Best Choice for Your Studies

by ibrlive | Oct 15, 2024 | Blog

When preparing to study in Germany, one of the key requirements for international students is opening a blocked account (also known as Sperrkonto). This financial prerequisite is mandatory for those seeking a student visa and plays a crucial role in demonstrating your financial stability while residing in Germany. In this detailed guide, we will explore everything you need to know about a blocked account in Germany, why it is mandatory, the top providers in the market, and a comparison between two of the most popular service providers, Expatrio and Fintiba. We’ll also explain why Fintiba emerges as the superior choice.

1. What is a Blocked Account?

A *blocked account* is a special type of bank account designed to hold a specific amount of money that international students must deposit as proof of financial means before arriving in Germany. The German government mandates that students show they have sufficient funds to cover living expenses during their stay, ensuring that they can support themselves without relying on outside income. The funds in this account are “blocked,” meaning that you cannot access the full amount at once. Instead, a fixed monthly sum is released to you, typically around €992 per month in 2025, to cover essential expenses like rent, food, and transportation. This setup allows the German authorities to ensure that students can meet their living costs without financial hardship.

2. Why is a Blocked Account Mandatory for Overseas Students to Study in Germany?

If you are an international student from a non-EU country, a *blocked account* is a mandatory requirement for obtaining a German student visa. This requirement is in place to ensure that you have enough funds to sustain yourself throughout your studies, as part-time work or scholarships may not always be enough to cover all expenses. The amount required in the *blocked account* for 2025 is €11,904, which translates to a monthly allowance of €992. Without a *blocked account*, it is impossible to get a student visa, and consequently, you cannot begin your studies in Germany. It’s crucial to set up your account early, as processing can take time, and delays could potentially impact your visa application timeline.

3. Different Service Providers Who Facilitate Blocked Account Opening

There are several institutions and service providers that facilitate the opening of a *blocked account* for international students. The most common and trusted ones include:

1. **Fintiba**: Premium full-service provider with comprehensive support, sophisticated product bundles, and ideal for high-risk, high-touch customer segments.
2. **Expatrio** – Another widely-used service that offers blocked account services with additional packages for health insurance and relocation services.
3. **Deutsche Bank** – Some students opt for opening their blocked accounts directly with Deutsche Bank, though this process tends to be slower and more bureaucratic.
4. **Coracle** – Simple, affordable, and fully online option for price-sensitive markets with a flexible “pick-and-mix” model.

4. Comparison Between Expatrio and Fintiba (Why Fintiba is the Winner)

When it comes to choosing a provider for opening your *blocked account* in Germany, Fintiba and Expatrio are often the top choices. Both offer comprehensive services, but there are key differences that make Fintiba stand out as the superior option.

– **User Experience**: Fintiba offers an intuitive and user-friendly online platform. The Fintiba login process is simple, and you can manage your account entirely online. This is particularly useful for students who need to open their accounts quickly and manage them remotely.

– **Processing Time**: Fintiba is known for its fast processing times. The entire process, from opening the account to accessing funds, can be completed within a few days.

– **Partnerships**: Fintiba has partnerships with major German banks, ensuring that your funds are secure and that you have access to the best financial services.

– **Comprehensive Services**: In addition to the blocked account, Fintiba offers health insurance, digital support services, and relocation assistance, making it a one-stop solution for students moving to Germany.

– **Customer Support**: Fintiba provides excellent customer support, offering help in several languages and ensuring that students’ questions and concerns are quickly addressed. **Expatrio**

– **User Experience**: Expatrio also provides an easy-to-use online platform, but it is slightly less intuitive than Fintiba’s.

– **Processing Time**: Expatrio’s processing times are comparable to Fintiba, though there have been reports of slight delays.

– **Additional Services**: Expatrio offers health insurance and service packages that cater to international students. However, the offerings are not as comprehensive or integrated as those of Fintiba.

– **Customer Support**: While Expatrio offers good customer support, it does not have the same level of flexibility and responsiveness that Fintiba offers.

Why Fintiba is the Winner Overall, Fintiba is the clear winner when it comes to opening a *blocked account* in Germany. With faster processing times, superior customer service, and a more comprehensive range of additional services, Fintiba provides a seamless experience that makes the transition to studying in Germany much smoother.

5. How to Open a Blocked Account with Fintiba Opening a *blocked account* with Fintiba is a straightforward process. You can complete the entire procedure online in just a few simple steps:

1. **Sign up with Fintiba** by visiting their official partner link: Open your blocked account with Fintiba
2. **Provide your personal details** – such as passport information, admission letter, and proof of financial means.
3. **Transfer the required blocked amount** – For 2025, this amount is €11,904.
4. **Access your funds** – Once you arrive in Germany and activate your account, you will receive a fixed monthly amount of €992, which will be released to you for living expenses.

The Fintiba login platform allows you to manage everything in one place, making it a hassle-free experience. Conclusion Choosing the right provider for your *blocked account* in Germany is essential for ensuring a smooth start to your studies. With its superior service offerings, faster processing times, and comprehensive student support, Fintiba stands out as the best choice for international students. If you are preparing to study in Germany and need to open a blocked account, consider using Fintiba for a reliable and stress-free experience. To get started, follow this link to open a blocked account with Fintiba (https://partner.fintiba.com/ibrliveindiaprivatelimited).

10 powerful strategies of booking currency forward contract for exporters

by Deepak Madan | Aug 7, 2024 | Blog

Forex Strategies: Best Practices for forward contract hedging in Volatile Currency Markets

In today’s volatile financial markets, forex strategies such as forward contract hedging are essential tools for minimizing currency risk. By implementing these strategies effectively, businesses can lock in exchange rates and protect themselves against adverse currency movements. This guide explores best forex strategies and practices, including forward contracts, provides a forward hedging example, and highlights how strategic forex planning can safeguard your financial outcomes.

Booking a currency forward contract hedges your adverse currency movement risk, but by adopting the following strategies you may earn good profits out of it.

1. Always Book Partial Exposure

Booking a partial exposure is always a good idea. For example, if you are expecting an inward payment of USD 100000 then you may book 50% of your exposure i.e. USD 50000, and keep USD 50000 open.

This strategy will balance your currency exchange rate. If the current spot rate on the date of payment is above your booking rate then you have another USD 50000 to get that rate and vice versa.

2. Make Significant Bookings When the Domestic Currency Has Depreciated

If the domestic currency (INR) has depreciated a lot (more than 2% to 5%) recently, you should book your upcoming & future exposure.

For example, if the USD/INR pair has recently moved to 75 from 72 Rs. In this case, the domestic currency, INR, has depreciated by almost 4% and is supposed to appreciate in the future or will depreciate by a marginal amount.

So, booking most of your exposure for up to six months in that scenario is advisable.

3. Hedge a Little Less Than Your Expected Payment

If you are expecting a payment of USD 100000, then most likely you will receive a little less because of correspondent bank charges.

You may receive an amount of USD 99950 in your bank’s Nostro account. So if you are planning to book the entire exposure, then always book USD 500 less than your expected payment to avoid cancellation of the extra amount and charges thereon.

4. Check the Exact Premium Before Booking a Currency Forward Contract

You should check the exact premium before booking a contract so that you get exactly what is available in the market. You may refer to currency websites like ibrlive.com, which displays the live forward rates.

5. Always Opt for a One-Month Window

For example, if you are booking a USD to INR forward contract for USD 100000 for a maturity on 20.09.2021, then you should ask your bank to provide a complete month window. You will get a window of one month starting from 20.09.2021 to 19.10.2021.

Please note that this window is provided because sometimes foreign payments can be delayed due to any reason. You will get a premium only till the start date, i.e., 20.09.2021, but all your inward payments up to USD 100000 from 20.09.2021 till 19.10.2021 can be converted at the booking rate.

6. Never Book More Than Your Currency Exposure

For example, if you are expecting a payment of USD 100000 and you are finding the rate very attractive, never book more than your expected payment. Because no one can predict currency movements. In case of adverse movement, you may lose money for cancellation of the extra booking.

7. Book Continuously

Booking continuously is another good practice to follow. Booking currency forward contracts regularly helps to balance your currency rate over time and is a sound forex strategy to reduce exposure volatility.

8. Book Immediately After Receiving the Purchase Order

One should immediately book a partial amount of the contract after receiving the purchase order. This helps you prevent losses on account of adverse movement.

9. Consider Shorter Duration Booking If Domestic Currency Is Expected to Appreciate

If you are expecting a depreciation in domestic currency in a short span, then you should book contracts for a shorter duration like for 15 days to 1 month. This tactical approach is part of responsive forex strategy execution.

10. Consider Longer Duration Booking When Domestic Currency Is Expected to Depreciate

If you are expecting an appreciation in domestic currency, then you should book contracts for a longer duration like for 2 months to 6 months.

Conclusion

By following the above strategies, you may hedge currency exposure along with saving extra money. These techniques fall under broader forex strategies used by exporters to enhance financial stability. Please note that you should not completely rely on the above strategies as it is the author’s view. You may follow your own strategies as well to form the right decision.

Understanding Overseas Direct Investment (ODI) and Latest RBI Guidelines for Indian Investors

Ultimate Guide to NRI Status: Everything You Need to Know About Taxes, Remittances, and Accounts

by Deepak Madan | Feb 22, 2024 | Blog

Non-resident Indians (NRI) are individuals who are of Indian origin and are living abroad. An NRI is a person who has lived outside India for more than 182 days in a financial year or who has left India with the intention of residing outside the country for an indefinite period. NRIs may be working or studying abroad or may have migrated to another country for personal reasons.

NRIs have specific financial needs and requirements, which are different from those of resident Indians. The Indian government has implemented various policies and regulations to address these needs and facilitate the smooth transfer of funds to and from NRI accounts.

Permitted Remittances from and to NRI Accounts

NRIs have the facility to open NRI accounts in India, which can be used to remit funds to and from their home country. The types of accounts available to NRIs include Non-Resident External (NRE) accounts, Non-Resident Ordinary (NRO) accounts, and Foreign Currency Non-Resident (FCNR) accounts.

Non-Resident External (NRE) Accounts

An NRE account is a savings or current account that can be opened by an NRI in India. Funds in an NRE account are held in Indian Rupees, and the account holder can repatriate the funds in a foreign currency of their choice. NRE accounts can be held jointly with another NRI or a resident Indian.

The following are the permitted remittances from NRE accounts:

• Funds can be remitted to any account held in the name of the account holder in India.
• Funds can be remitted to the account holder’s foreign account in any foreign currency.
• Funds can be used to make investments in India, subject to the rules and regulations set by the Reserve Bank of India (RBI).
• Funds can be used to make donations to charitable organizations in India.

Non-Resident Ordinary (NRO) Accounts

An NRO account is a savings or current account that can be opened by an NRI in India. Funds in an NRO account are held in Indian Rupees and cannot be repatriated to a foreign currency. NRO accounts can be held jointly with another NRI or a resident Indian.

The following are the permitted remittances from NRO accounts:

• Funds can be remitted to any account held in the name of the account holder in India.
• Funds can be used for local payments in India, such as paying bills, rent, or taxes.
• Funds can be used for investments in India, subject to the rules and regulations set by the RBI.
• Funds can be used to make donations to charitable organizations in India.

Foreign Currency Non-Resident (FCNR) Accounts

An FCNR account is a term deposit account that can be opened by an NRI in India. Funds in an FCNR account are held in foreign currency, and the account holder can repatriate the funds in the same foreign currency. FCNR accounts can be held jointly with another NRI or a resident Indian.

The following are the permitted remittances from FCNR accounts:

• Funds can be repatriated to the account holder’s foreign account in the same foreign currency.
• Funds can be used to make investments in India, subject to the rules and regulations set by the RBI.

Key Difference between NRE & NRO accounts:

While both accounts are designed for NRIs, there are some key differences between them. Here are some of the main differences between NRE and NRO accounts:

1. Purpose of the Account: NRE (Non-Resident External) accounts are used to park and manage funds that originate outside of India. These accounts are typically used for maintaining income earned overseas, such as salary, rent, dividends, etc.

NRO (Non-Resident Ordinary) accounts, on the other hand, are used for managing income that is earned in India, such as rent, dividends, and other types of income that originate from within the country.

1. Repatriation of Funds: One of the key differences between NRE and NRO accounts is the ease with which funds can be repatriated to the NRI’s country of residence. Funds in NRE accounts are freely repatriable, which means that they can be transferred outside India without any restrictions. This means that the funds held in an NRE account can be easily repatriated to the NRI’s country of residence in a foreign currency.

Funds in NRO accounts, on the other hand, are not freely repatriable. The amount of money that can be transferred outside of India from an NRO account is subject to certain limits and requires approval from the Reserve Bank of India (RBI).

1. Taxation: Another key difference between NRE and NRO accounts is the tax treatment of the funds held in each account. Interest earned on funds held in an NRE account is tax-free in India, which means that NRIs do not have to pay tax on the interest earned on these accounts. However, NRIs may be required to pay tax on the interest earned on funds held in an NRO account.
2. Currency: NRE accounts can be maintained in Indian rupees or foreign currency. NRO accounts, on the other hand, can only be maintained in Indian rupees.
3. Joint Accounts: NRE accounts can be held jointly with another NRI, while NRO accounts can be held jointly with an NRI or a resident Indian.

Taxation of Non-Resident Indians (NRI) in India

NRIs are subject to different tax rules and regulations in India compared to resident Indians. The taxation of NRIs in India depends on their residential status, i.e., whether they are considered a resident or non-resident for tax purposes.

Residential Status of NRIs for Tax Purposes

The notification from the income tax department clarifies that an NRI is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India. To determine the residential status of an individual, Section 6 of the Income-tax Act is used. An individual is deemed to be a resident of India if he or she satisfies any of the following conditions:

1. If he or she is in India for a period of 182 days or more during the previous year.
2. If he or she is in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.

However, there are exceptions to these conditions. For example, in the case of an Indian citizen or a person of Indian origin who visits India during the year, the period of 60 days mentioned above is substituted with 182 days. Additionally, an Indian citizen whose total income, other than income from foreign sources, exceeds Rs. 15 lakhs during the previous year is deemed to be a resident in India if he or she is not liable to pay tax in any country.

Tax Implications for NRIs in India

1. Income earned in India: NRIs are subject to tax in India on the income they have earned in India. This includes income from employment, business or profession, rental income, capital gains from the sale of property or investments in India, etc.
2. Income earned abroad: NRIs are not subject to tax in India on the income they have earned abroad. However, they may be required to pay tax on the income they have earned abroad in the country where it was earned.
3. TDS (Tax Deducted at Source): TDS is deducted from the income of NRIs in India, just like resident Indians. The TDS rates for NRIs are higher than those for resident Indians.
4. Double Taxation Avoidance Agreement (DTAA): India has signed DTAA with various countries to avoid double taxation of income. NRIs can claim tax relief under DTAA if they have paid tax on the same income in India and another country.
5. Tax Return Filing: NRIs are required to file a tax return in India if their income in India exceeds the basic exemption limit (currently INR 2.5 lakhs). NRIs are also required to file a tax return if they have any income from capital gains or any income that is not subject to TDS.

Will a student going abroad to study be treated as an NRI?

Yes, a student who is going abroad to study will generally be treated as an NRI (Non-Resident Indian) for income tax purposes in India. The student’s residential status is determined based on the number of days he or she stays in India during a financial year (which runs from April 1 to March 31).

As per the Income Tax Act, an individual is considered an NRI if he or she satisfies either of the following conditions:

1. The individual has been outside of India for 182 days or more during the financial year, or
2. The individual has been outside of India for a period of 60 days or more during the financial year and has been outside of India for a total of 365 days or more in the preceding four financial years.

Read Here: https://ibrlive.com/understanding-the-difference-between-nri-and-pio-key-features-and-benefits/