UAE NRIs: Thinking of investing back home? RBI just made it easier

Dubai: India’s central bank has moved to make it easier for non-resident Indians (NRIs) to invest back home. The Reserve Bank of India (RBI) last week raised the borrowing limits for share-backed loans and IPO financing, while simplifying rules for foreign investment and external borrowing.

The steps, part of a broader push to deepen India’s capital markets and reduce transaction costs, could provide UAE-based NRIs with new opportunities to invest in equities, expand their businesses, and manage currency exposure at a time of stable deposit returns and a broadly stable rupee.

Loan ceilings for IPO subscription

The RBI’s decision to raise loan ceilings for IPO subscriptions and share-backed borrowing is set to reshape how non-resident Indians (NRIs) in the UAE tap domestic capital markets. Investors can now borrow up to ₹10 million against shares, units of real estate and infrastructure trusts, and up to ₹2.5 million to fund initial public offerings, more than doubling previous thresholds.

For UAE-based NRI investors, this means greater leverage to participate in India’s equity market without having to liquidate their assets. “Loan limits raised, IPO financing up to ₹2.5 million, LAS up to ₹10 million. This helps NRIs leverage equity investments without selling assets,” said Maher George, Sales Manager at VT Markets. The change comes as regulators also simplify rules on borrowing against listed debt and broaden access to credit.

Deposits and currency outlook stay steady

Despite the regulatory push, returns on NRE/NRO deposits are unlikely to shift in the near term. “Returns will remain broadly stable. No immediate upside unless US Fed hikes force Indian banks to adjust,” George said. He expects NRI deposit rates to “likely stay steady in the next six months” but could edge higher if global rates rise.

On currency stability, George noted that “low inflation supports INR stability, but US Fed policy and capital flows remain risks.” For UAE NRIs paid in dirhams, that means the rupee is unlikely to see a sharp depreciation unless global markets turn risk-off or the dollar strengthens further. Over time, the RBI’s rupee internationalisation drive, aimed at reducing conversion costs by expanding cross-border use, could trim foreign exchange expenses. “Allowing rupee use in more cross-border deals will reduce conversion charges,” he said.

Easier rules for business and trade flows

The central bank is also easing FEMA compliance and rationalising external commercial borrowing (ECB) regulations, moves that could help NRIs expand their India-linked ventures. “Simpler rules make it easier for NRIs to invest, remit, and expand businesses in India,” George said. Exporters, including NRI-owned firms, can now hold foreign currency earnings for a longer period, improving cash flow and shielding them from short-term exchange rate volatility. “It improves cash flow and shields exporters from short-term FX volatility,” he added.

Low inflation reduces risk for overseas investors

With inflation easing, the rupee looks better anchored than it has in years. “Lower inflation reduces depreciation risk, making India safer for foreign/NRI investors,” George said. Combined with stable policy rates, the repo rate remains at 5.5%, the environment could keep India attractive for medium-term NRI flows.

What UAE NRIs should watch

For savers, the status quo on deposit rates means existing NRE/NRO strategies hold. For investors, easier leverage on equity, smoother remittance rules, and lower foreign exchange friction stand out. Yet global rate moves and the US Fed signals will remain the swing factor for the rupee and borrowing costs. The RBI’s latest round of reforms signals intent to draw NRI wealth deeper into India’s markets while protecting stability.