An NRI’s Guide to Investing in Mutual Funds in India

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It is common for Indians to migrate to the west. Many of these Indians dream of returning to their homeland, since they have dependents there. If this is the case, it’s a good idea to look into India for investment opportunities. NRIs are also investing in Indian real estate. NRIs have been investing in mutual funds for several years because the returns are better than real estate.

NRIs can invest in Mutual Funds in India

This question is probably answered already. NRIs are allowed to invest in Indian mutual funds. You will need to follow the Foreign Exchange Management Act (FEMA) rules. For mutual fund investments, you do not need approvals from RBI. Both repatriable as well as non-repatriable investments are possible.

An FCNR or NRE account at one of the Indian banks is required to invest on a repatriable basis. You can withdraw the investment money from either your NRE/FCNR account or through banking channels.

You can also make investments on a non-repatriable basis. You must have money in your NRE/FCNR/NRO account to invest.

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Can an NRI invest in Mutual Funds in India

NRIs, just like other investors, can reap the benefits of investing in mutual funds.

  • It’s easy to invest and manage mutual funds online. Online management and tracking of your investment account is possible. You no longer need to send cheques or fill out physical forms in order to invest in stocks or debentures. You don’t need to live in the same place to invest in mutual funds. Your statements will be emailed to your email address. Online purchase and sale of mutual funds will be possible.
  • Rupee Appreciation-Based Income: You will earn more on your investments if the currency of your country rises. Even with some depreciation, you will still be able to get good returns.

How can an NRI invest in Mutual Funds in India

It is the same process as if you were in India. The regulatory requirements will be met, such as submitting your KYC request, opening an NRE, NRO or FCNR account (or a demat account for Indian citizens) at a bank within the country. There are two options for investing in mutual funds:

  1. Direct/self – You have the option to make the transaction through your normal banking channels. An application will be required to indicate whether you are investing in a repatriable, or non-repatriable manner. You will need to submit updated KYC details. Certified copies of your PAN card and resident proof, current photograph, passport, bank statements, and recent photographs will be required. You may need to verify your identity in person. To do this, visit the Indian Embassy in your country.
  2. Power Of Attorney (PoA ) : This is a common and simple way to invest. This is a legal way to grant someone the right to invest for you. Many mutual fund companies permit PoA holders to invest for an NRI. This person is authorized to make all decisions regarding mutual funds. KYC requires signatures from both parties.
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Mutual Fund Regulations for NRIs

There are some other things you should know, aside from KYC requirements.

  • Remittance certificate: You will need to attach an FRIC (Foreign Inward Remittance Certificate) if payment is made by draft or cheque. A letter from your bank is usually sufficient.
  • Redemption – The corpus is sent after you have paid tax deductions.
  • Tax Deduction If India has signed the Double Taxation Avoidance Treaty (with your resident country), you will only have to pay tax once.

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