Red Flags in NRI Investment Products - How to Identify Them

A member in our WhatsApp community recently shared a screenshot. 

A "wealth manager" had promised him 15% monthly returns on a "special NRI investment scheme." The catch? 

He needed to transfer money immediately to lock in the rate.

He asked us before transferring. That decision saved him ₹18 lakhs.

Not everyone is that lucky. India's Supreme Court flagged that victims lost nearly ₹30 billion to digital scams in recent years, with many targeting NRIs with Indian bank accounts. 

In the UAE specifically, 27% of residents reported losing money to scams in 2024. (Source: Gulf News)

This guide covers the exact red flags that separate legitimate investments from schemes designed to separate you from your money.

The "Guaranteed Returns" Trap

This is the single biggest red flag. No legitimate investment can guarantee specific returns.

When someone promises 8%, 12%, or 15% "guaranteed" returns on market-linked products, they're either lying or running a Ponzi scheme. 

Markets fluctuate. Returns vary. Anyone claiming otherwise is selling fantasy.

Here's the reality check:

If someone promises equity-like returns with FD-like guarantees, walk away.

👉 Tip: RBI prohibits unauthorized entities from accepting deposits. Only RBI-licensed banks can offer guaranteed returns on deposits. Ask for the license number.

Unregistered Sellers and Platforms

Legitimate financial products in India require registration with regulatory bodies. If a seller can't prove registration, they're operating illegally.

For securities (stocks, mutual funds, bonds): Only SEBI-registered entities can sell these. Unregistered advisors face penalties under SEBI regulations.

For insurance products: IRDAI registration is mandatory. Check the IRDAI website for license verification.

For deposits: RBI authorization required. NRE and NRO accounts must be with RBI-licensed banks.

For real estate: RERA registration is mandatory for projects. No RERA number means no legal recourse if things go wrong.

Before investing anywhere, verify:

• SEBI registration at sebi.gov.in
• IRDAI license at irdai.gov.in
• RBI authorization at rbi.org.in
• RERA registration on state RERA portals

If verification fails, don't invest.

Pressure Tactics and Artificial Urgency

"This offer expires tonight." "Only 3 spots left." "Transfer now or lose the opportunity."

These phrases are manipulation, not marketing.

Legitimate investments don't evaporate in 24 hours. Mutual funds will still exist tomorrow. GIFT City products won't suddenly close applications. Bank FDs accept deposits any business day.

Scammers create urgency because scrutiny is their enemy. The moment you stop to think, research, or ask questions, their scheme falls apart.

What legitimate advisors do: Give you time to review documents, encourage questions, provide written disclosures, and let you consult family or other professionals.

What scammers do: Demand immediate decisions, discourage outside consultation, make you feel foolish for asking questions, and threaten that the opportunity will disappear.

👉 Tip: Any advisor who gets angry when you ask for time to think is not working in your interest.

Hidden Fees and Unclear Structures

"No charges" usually means charges are hidden elsewhere.

ULIPs are notorious for this. Banks earned ₹21,773 crores in commissions from selling insurance and investment products in FY24, according to 1 Finance Magazine. That commission comes from somewhere, and it's your returns.

Common hidden charges in NRI investment products:

In ULIPs:

• Premium allocation charges (up to 12.5% of premium)
• Fund management charges (up to 1.35% annually)
• Mortality charges (deducted monthly)
• Surrender charges (if you exit early)

In mutual funds:

• Entry/exit loads
• Expense ratios (ongoing)
• Transaction fees

In real estate:

• Stamp duty (5-7% of property value)
• Registration fees
• Maintenance deposits
• Hidden "development charges"

A ₹1 crore property can easily cost ₹1.15-1.20 crore all-in. Compare this to GIFT City investments with transparent fee structures.

Red flag: If you can't get a complete fee breakdown in writing before investing, something is being hidden.

The ULIP Mis-selling Problem

This deserves special attention because it's endemic.

Bank relationship managers routinely mis-sell ULIPs to NRIs. The tactics are predictable:

"It's like a special FD with insurance benefits." 

No, it's not. ULIPs are market-linked products with a 5-year lock-in. Your returns depend on market performance, not guaranteed rates.

"You'll double your money in 5 years." 

No legitimate market-linked product can promise this. If markets crash, you could lose money.

"It's mandatory for your loan approval." 

This is illegal. IRDAI prohibits bundling insurance with loans or other services. Report this to the bank's grievance cell.

"You'll get 12-15% annual returns." 

ULIPs show historical performance as future certainty. Past returns don't guarantee future results.

If you already have adequate life insurance through a term plan, you likely don't need the insurance component of a ULIP. Direct mutual funds often deliver better returns without the insurance overhead.

👉 Tip: If a bank employee suggests any investment product while you're there for something else (loan, locker, account upgrade), be extremely skeptical.

Real Estate Red Flags for NRIs

Property fraud targeting NRIs is rising because your absence makes you vulnerable. 

A Gurugram NRI recently lost a ₹10.7 crore plot through a forged gift deed, discovered only when acquaintances informed him years later. (Source: Outlook Money)

Red flags in property deals:

1. No RERA registration. Every legitimate project must be registered. Verify the number on the state RERA portal. Scammers quote fake numbers or use registration from different projects.

2. Seller uses Power of Attorney. The Supreme Court has ruled that PoA alone cannot transfer property ownership. A registered Sale Deed is mandatory. If someone is selling "on behalf of" an NRI owner through PoA, demand direct verification with the actual owner.

3. Prices significantly below market. If a property is 30% cheaper than comparable options, ask why. Distressed sales exist, but so do scams.

4. Pressure to pay in cash. Always use bank transfers. Cash payments leave no trail and no legal recourse.

5. Builder can't provide approvals. Ask for: building plan approval, completion certificate, occupancy certificate, NOC from relevant authorities. Missing documents mean missing safety.

Read our detailed guide on NRI real estate investment pitfalls.

Ponzi Scheme Warning Signs

Ponzi schemes pay existing investors with money from new investors. They work until they don't, and when they collapse, late investors lose everything.

Warning signs:

• Returns are consistent regardless of market conditions (real investments fluctuate)
• Strategy is described as "proprietary" or "secret" (legitimate managers explain their approach)
• You're encouraged to recruit others for bonuses (this is how the pyramid sustains itself)
• Withdrawals become difficult or delayed (money is being used to pay other investors)
• Documentation is vague or non-existent (legitimate investments provide regular statements)

Recent examples targeting NRIs include "digital trading platforms" promising 10% monthly returns and "cryptocurrency investment clubs" requiring referrals for full benefits.

👉 Tip: If an investment requires you to bring in more investors to maximize your returns, it's likely a pyramid or Ponzi scheme, not a legitimate investment.

What Legitimate Investments Look Like

For contrast, here's what proper NRI investment products provide:

Regulatory compliance:

• SEBI registration for securities
• RBI authorization for deposits
• IRDAI license for insurance
• RERA registration for real estate
• FEMA compliance for cross-border transactions

Transparent documentation:

• Complete fee disclosure before you invest
• Written terms and conditions
• Regular account statements
• Tax documentation (TDS certificates, Form 16A)
• DTAA benefit documentation

Reasonable expectations:

• Returns aligned with asset class norms
• Clear explanation of risks
• No guaranteed returns on market-linked products
• Honest discussion of lock-in periods and liquidity

Accessible support:

• Responsive customer service
• Grievance redressal mechanisms
• Clear escalation paths
• Compliance with regulatory timelines

Belong, for example, operates with PSP and broker-dealer licenses from IFSCA. Our GIFT City products are regulated, our USD FD rates are transparent, and our fee structures are disclosed upfront.

The Verification Checklist

Before investing in any NRI product, complete this checklist:

Regulatory check:

• [ ] Verify seller's registration with relevant authority (SEBI/RBI/IRDAI/RERA)
• [ ] Confirm product is permitted for NRIs under RBI rules
• [ ] Check for any regulatory actions against the entity

Documentation check:

• [ ] Receive complete fee disclosure in writing
• [ ] Review terms and conditions (not just marketing material)
• [ ] Understand lock-in periods and exit options
• [ ] Clarify tax implications

Reality check:

• [ ] Are promised returns realistic for this asset class?
• [ ] Is there pressure to decide immediately?
• [ ] Can you speak to existing customers?
• [ ] Does the opportunity seem too good to be true?

Second opinion:

• [ ] Discuss with a trusted friend or family member
• [ ] Consult a SEBI-registered advisor (not connected to the seller)
• [ ] Ask in community groups (like our WhatsApp community)

If any item fails this checklist, don't invest.

What To Do If You've Been Scammed

If you suspect you've fallen victim to a fraudulent scheme:

1. Document everything.
   Save all communication, receipts, and transaction records.

2. Report immediately.
   File complaints with:

• Local police (Section 420 IPC for cheating)
• Cybercrime cell (for online frauds)
• Relevant regulator (SEBI, RBI, IRDAI, RERA)

1. Contact your bank. If you transferred money, inform your bank's fraud department immediately.

2. Seek legal advice. A lawyer specializing in financial fraud can guide recovery options.

3. Warn others. Share your experience in community groups to prevent others from falling victim.

Recovery rates are low. Only 9% of UAE scam victims recovered their money in 2024. Prevention is far more effective than cure.

The Bottom Line

Red flags aren't complicated. They're just easy to ignore when someone is telling you what you want to hear.

Guaranteed high returns don't exist. Pressure tactics mean something is wrong. Unregistered sellers are illegal. Hidden fees are theft by another name.

The best protection is healthy skepticism. Question everything. Verify independently. Take your time. Consult others.

At Belong, we built our platform specifically to offer NRIs regulated, transparent alternatives. Our GIFT City investments, mutual fund options, and USD fixed deposits come with clear documentation, verified regulatory compliance, and no hidden surprises.

Track your investment options with our Gift Nifty tool. Or join our WhatsApp community where thousands of NRIs share experiences and verify opportunities before investing.

Your money took years to earn. Protect it.

Disclaimer: This article is for educational purposes. Always conduct your own due diligence and consult qualified professionals before making investment decisions.