(This column was first published on Value Research Online.)
Upon receiving reports of some kind of a first-ever financial protest by NRIs in Washington DC, I decided to investigate further. The first thing I did was Google ‘financial protest’, and came to the conclusion that yes, this was indeed the first-ever protest of such a kind by non-resident Indians. Of course, it wasn’t anything to be surprised about – protesting comes as naturally to Indians as forming ‘U’, ‘S’ or ‘W’ shaped queues. But what was interesting about this protest was that it was being held by NRIs for some sort of a financial cause. Given the novelty, I decided to take my investigation beyond Google.
However, even though I wanted to, budgetary constraints didn’t allow me to fly to Washington DC to find out further about this protest. Luckily, I found out that a cousin of mine was a part of it. And over a Skype call with him, I learned that these NRIs in the US of A were protesting a recently passed law called the Foreign Account Tax Compliance Act (FATCA). This is a US government law that makes it compulsory for all financial institutions to provide details of transactions made with them by US persons. These financial institutions include fund companies in India, which for various reasons didn’t find it feasible enough to report investments made with them by US persons. Hence, they stopped accepting investments by NRIs. This lead to the protests. It’s an altogether different matter that NRIs are just a minor part of the people affected by this law and the law is in no way discriminatory to them, but then again, how can an Indian let go of an opportunity to outrage and protest, right?
Of course, there wasn’t actually such a protest, but I can easily imagine one. NRIs are, after all, losing out on investing in India when it is probably the best time to invest in India. With so much optimism in the air, it is natural for non-resident Indians to want a piece of the pie they’ve left behind. But unfortunately, there’s nothing they can do. The law is such that there’s no way around it. And one can’t even blame the Indian AMCs, the penalties of not reporting transactions are too stringent for them to take a risk with that. Looks like they’d rather just lose out on NRI investments.
But that leaves NRIs in a lurch. The only way for them to invest in India is through US funds that invest in India. The option they had to invest directly in Indian funds is almost as good as gone. The US government has to do what it has to do and the Indian AMCs have to do what they have to, which unfortunately means that NRIs can’t do what they want to do. Their plight reminds me a classic Bollywood heroine who’s in love with the hero, but can’t marry him because her father and he are at loggerheads over something she has no control of. Tch!