FINANCE

What is NRI | Can NRI invest in mutual funds

NRIs can invest in mutual funds in India. They have to follow the rules of the FEMA.FEMA means Foreign Exchange Management Act .However, some AMCs do not accept mutual fund applications from NRIs in Canada,USA etc.

Depending on investment objectives and risk tolerance, you can start with equity funds, debt funds or hybrid funds. Moreover, you have many options and you can choose the right mutual fund based on your investment horizon.

NRIs benefit from mutual fund investments

India attracts thousands of foreign investors who invest in its economy. Below are the benefits that NRIs can get by investing in such Indian mutual funds.

Easy to manage funds online from anywhere

It is easier to track and manage mutual funds from anywhere in the world. Investors buy, redeem, and switch units of mutual fund schemes as well as opt for systematic transfer or withdrawals online.

There is no need for issuing cheques, DDs, submitting physical forms, or even being in the country.You will receive regular consolidated account statements through emails.Asset management companies (AMCs) disclose portfolio holdings online to keep their investors informed.

Investment procedure for NRIs in India

India’s Asset management companies are not allowed to accept investments in foreign currencies.Hence the first step to investing in the Indian mutual funds. You can open an NRO account, NRE account, or a Foreign Currency Non-Resident (FCNR) account with an Indian bank and You can use invest by any of the below methods.

Self/Direct

Your mutual fund application requires KYC details to indicate that the investment is on a repatriable or non-repatriable basis.KYC documents include photograph, attested copies of PAN card, passport, residence proof outside India), and bank statement. The bank requires an in person verification, which you can comply with by visiting the Indian Embassy in your resident country.

Power of Attorney

Another popular method is to have invest on your behalf. AMCs allow the power of attorney (PoA) holders to invest on your behalf and also make investment decisions. Signatures of the NRI investors and PoA holder must be present on the KYC documents if you seek to invest in mutual funds in India. 

Mutual fund regulations for NRIs

KYC for NRIs

Complete the KYC process then you must submit a copy of your passport  relevant pages with name, date of birth, photo, and address. Providing the current residential proof is a temporary or permanent.There are Some fund houses that may insist on in person verification.

FIRC (Remittance Certificate)

If you have made the payment via a cheque and demand draft, then you must attach a foreign inward remittance certificate (FIRC). In this case it is not possible, then a letter from the bank would also be accepted. This confirms the source of funds.

Redemption

The AMC will credit the corpus that is investment and gains. You get when you redeem your mutual fund units to your bank account after deducting applicable taxes if any.

There are many banks that allow crediting of the redemption amount directly to the NRO or NRE account. And If you have opted for non-repatriable investment, then you can credit the proceeds only to an NRO account.

Points to remember when investing in India

  • Until a person becomes an NRI, he has the right to return the amount invested and the amount earned.
  • Submitting proof of residence in the current country is mandatory and You must also attach an attested proof along with the application.
  • The compliance requirements in the United States and Canada are more stringent as compared to other nations. All financial institutions must share the details of financial transactions involving a US person with the US Government.
  • In short, NRIs can choose to invest in your home country. The process may have some initial hassles. However, the return on that investment will be worth it in the long run.

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