personal finance

Can a returning NRI open a PPF account?

Our panel of experts answers reader’s questions related to any aspect of personal finance every week.

I was out of India for five years. I returned in August 2020 and got a job here. I wish to open a PPF account. Can I do so though technically I am still an NRI? Can I continue with the account in case I decide to take up a job abroad again five years from now?

Prableen Bajpai, Founder FinFix® Research & Analytics, replies:

You cannot open a PPF account as a nonresident Indian. However, since you are now in India and would undergo a change in residency status, you will be able to open an account going forward. If you become an NRI during the period the account is in operation, the account may be continued till its maturity and the benefits available to the depositor in the said account shall be available only on a non-repatriation basis. However, the account shall not be allowed to be extended or continued beyond maturity. A recent rule allows an account holder to pre-close the account on change in residency status. Irrespective of the residency status on maturity, the proceeds are tax-exempt in India.

I am 58 and retired. I have received my final settlement of Rs 1.5 crore after taxes. Where I can invest this amount to get a monthly return of Rs 1 lakh? My wife and I have health insurance of Rs 5 lakh each.

Rajiv Bajaj, Chairman & MD, Bajaj Capital, replies: You could invest in a mix of quality debt funds (with SWP facility), AAA rated corporate deposits offering coupons of up to 6.50% and RBI floating rate bonds offering annual coupon of 7.15% . You could invest Rs 50 lakh equally between ICICI Banking & PSU Debt Fund, HDFC Banking & PSU Debt Fund, Kotak Corporate Bond Fund, Nippon India Floating Rate Fund & IDFC Bond Fund Short Term Fund with monthly SWP of up to 0.40% of the corpus which will translate into Rs 20,000 monthly. Another Rs 50 lakh can be divided between HDFC and Bajaj Finance Corporate Deposits which can give you approximately Rs 27,000 monthly interest. The remaining Rs 50 lakh can be invested in RBI Floating Rate Savings Bond to get around Rs 30,000 per month. All these investments are taxable. To get Rs 1 lakh per month, you will need to invest an additional Rs 35-40 lakh.


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