BOMBAY, 1 March 2004 - Recently, the Reserve Bank of India (RBI) allowed resident individuals (Indians) to remit upto $25,000 per calendar year 'for any purpose' thus opening up newer avenues for investment.

The facility allows resident individuals to acquire and hold immovable property or shares or any other asset outside India without prior approval of the RBI. Individuals will also be able to open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the scheme without prior approval of the RBI. What this means is that you no longer have to be an NRI to switch between dollars and rupees.

This facility is available to resident individuals only. This means only to a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year. It doesn't include a person who has gone out of India or who stays outside India, for or on taking up employment outside India or carrying on outside India a business or vacation. It also does not include any person or body corporate registered or incorporated in India and not even an office, branch or agency in India owned or controlled by a person resident outside India.

The resident individuals may freely remit upto $25,000 per calendar year for any current or capital account transactions or a combination of both. He can also remit the money to acquire and hold immovable property or shares or any other asset outside India or even to open, maintain and hold foreign currency accounts with a bank outside India.

This facility is in addition to those already available for private travel, gift remittances, studies, donations. This means that the additional $25,000 per annum can be used for remittance over and above the remittances that are permitted under any other exiting guidelines.

This means that resident Indian can now open an account abroad or even buy into stocks of Microsoft or Amazon, Wal-Mart or the likes of such global conglomerates. There are four ways in which one can invest money in global stock markets - invest directly in stocks (on your own by opening an online account with a broker), opting for the services of a portfolio manager, invest in mutual fund schemes being launched in India for the purpose or invest in mutual funds already in existence overseas.

Resident Indians will have to open a foreign currency account before they start investing. Analysts warn that it might not be such a good idea to invest in global stocks at this point of time.

Why? Mainly because the US economy is not exactly on fire at the moment and there is no way that the US markets will be able to outperform the rest of the world markets anytime soon. Also forex experts say that Indian rupee against the US dollar is expected to only appreciate further. This means that dollar assets will depreciate in rupee terms even if the underlying investment continues to do well.

Experts confer that they do not expect to see a rush by Indians to remit abroad as it will take time for individuals to understand and use the facilities abroad. One also needs to understand the implications of currency risks and taxes.

What about buying real estate abroad? Analysts say that $25,000 is too small an amount for buying international real estate. One will need a minimum of $100,000 to make any meaningful purchase.

Apart from this investors can also look at the option of putting money in some fixed deposit products in foreign currency with reputed banks. At the moment, only three banks are offering this facility - Citibank, ICICI Bank and Bank of Baroda. Foreign currency deposits can be held in different currencies - the US dollar, pound sterling, the euro. Swiss franc and the Australian dollar. Citibank is offering interest rates that are 1 percent higher than LIBOR rates for deposits opened before March 1, 2004.

Well, at the moment, all this is unchartered territory. These are untested waters and it will take some time for the investors as well as the institutions to understand and comprehend the global markets. What is significant that this is a small beginning and is an initial step into full capital account convertibility.