Zerodha co-founder Nithin Kamath has raised concerns that cumbersome account-opening procedures may be preventing non-resident Indians (NRIs) from taking advantage of what he describes as a “no-brainer” investment opportunity currently available in India.
In a recent post, Kamath pointed to Foreign Currency Non-Resident (FCNR) deposits, which have become particularly attractive after the Reserve Bank of India (RBI) decided to bear the currency hedging cost, making it easier for banks to offer higher returns without exposing depositors to rupee risk.
“Onboarding for NRIs has always been a pain. Right now, the FCNR deposit scheme is a total no-brainer: the RBI is bearing the currency hedging bill, allowing you to get local, FD-like rates while your money stays in dollars with zero rupee risk,” Kamath wrote.
FCNR, or Foreign Currency Non-Resident, deposits allow NRIs to keep their money in foreign currencies such as the US dollar, pound sterling or euro while earning interest from Indian banks. Unlike traditional fixed deposits, the money is not converted into rupees, shielding investors from currency losses if the rupee weakens.
Normally, banks incur a cost to hedge the currency risk associated with such deposits. The RBI has temporarily agreed to bear that cost, making FCNR deposits significantly more attractive. In practical terms, NRIs can earn returns closer to Indian fixed-deposit rates while continuing to hold their savings in dollars or other foreign currencies and avoiding direct exposure to rupee volatility.
It is this combination of higher returns and lower currency risk that prompted Kamath to describe the scheme as a “total no-brainer”.
According to Kamath, however, the attractiveness of the scheme is being undermined by a much older problem.
“But despite how good the scheme is, it doesn’t help if opening an account takes 60 days. By the time the paperwork clears, the window might have closed, or the NRI may have lost interest,” he said.
Opening an NRI investment account often involves multiple layers of verification, including overseas address validation, tax documentation, PAN linkage and compliance with foreign exchange regulations. Investors seeking access to Indian equities may also need trading and demat accounts, adding to the complexity.
Kamath pointed to Rupeeflo, a Rainmatter-backed startup, as one company attempting to simplify the process.
“They’ve partnered with leading banks to slash that 60-day onboarding down to just 24 hours, covering the bank account, trading account, demat, and the whole works,” he said.
However, Kamath suggested that the bigger question is whether paperwork is truly the main obstacle holding back NRI participation.
“It will be interesting to watch what happens to activation rates once friction is this low,” he wrote.
“Does removing the 60-day wait actually change NRI behavior, or does the inertia live somewhere else entirely?”
The question goes beyond a single startup or deposit scheme.
India receives some of the highest remittance inflows in the world and has long sought to channel a greater share of NRI savings into its financial system. If faster onboarding results in a meaningful increase in participation, it would suggest that bureaucracy and administrative hurdles have been major barriers all along.
If not, the reasons may lie elsewhere, ranging from tax considerations and regulatory complexity to investment preferences and simple inertia.
For now, Kamath’s comments have reignited a debate over whether India has done enough to make investing as easy for overseas Indians as it has made sending money home.