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

The migration of Indians to the global west is a common phenomenon. Many of these Indians nurture the dream of coming back to their motherland, as they have dependents here. In such cases, looking for investment options in India is only the right thing to do. Moreover, you will find many NRIs investing in real estate in India. However, for the past few years, NRIs have started investing in mutual funds too as the returns are higher compared to real estate.

Can NRIs invest in Mutual Funds in India?

You probably already have the answer to this question. Yes, NRIs can invest in mutual funds in India. However, you will have to adhere to the rules under the Foreign Exchange Management Act (FEMA). You will not require any approvals from the RBI for investing in mutual funds. You can invest both on repatriable and non-repatriable basis.

To invest on a repatriable basis, you will need an FCNR or NRE account with one of the banks in India. The investment money has to be remitted either from your NRE or FCNR account or via banking channels.

You can also invest on a non-repatriable basis. The investment money has to come from your NRE/FCNR or NRO account.

Should an NRI Invest in Mutual Funds in India?

Yes, like any other investor, NRIs can reap many benefits by investing in mutual funds

Easy to Invest and Manage: Since all processes are now online, investing in mutual funds has become more comfortable. You can manage and track your investment account online. Gone are the days when you had to give cheques, fill physical forms, and provide demand drafts for investing in stocks and debentures. Now, you do not need to be in the same country to invest in mutual funds. You will get your statements emailed to you. You will be able to buy and sell mutual funds online.

Rupee Appreciation-Based Profits: If there is a hike in your resident country’s currency, you will get to earn higher profits on your investments. You will able to reap good returns even with a little depreciation.

How can an NRI Invest in Mutual Funds in India?

The process is similar to what you would have done had you been in India. You will have to comply with the regulatory requirements like submitting your KYC application, open an NRE, NRO, or FCNR account (a demat account if you are an Indian citizen) with a bank in the country. You have two methods as far as investing in mutual funds is concerned:

Direct/self: You can choose to carry out the transaction via normal banking channels. You will have to fill up an application that will mention whether you are investing on a repatriable or non-repatriable basis. Updated KYC details will have to be submitted. You will need certified copies of your PAN card, resident proof, recent photograph, passport, and bank statements. An in-person verification may be required, and you can do so by visiting the Indian embassy in your country.

Power of Attorney (PoA): A simple and common way of investing is via power of attorney. This means you legally grant rights to someone to invest on your behalf. Most mutual fund companies allow PoA holders to invest on behalf of an NRI. That person can take all decisions related to your mutual funds. Signatures of both the parties are required as a part of KYC.

Mutual Fund Regulations for NRIs:

Apart from the KYC requirements, there are a few other things that you need to know:

Remittance Certificate: If payment is made via a draft or cheque, you will need to attach a FRIC or Foreign Inward Remittance Certification. A letter from the bank also usually suffices.

Redemption: The corpus is sent to your account after tax-deductions.

Tax Deduction: If India has signed the Double Taxation Avoidance Treaty with your resident country, you will have to pay tax only once.

Talk to our representative for more details.

NRIs can invest in mutual funds in India. However, you will have to adhere to the rules under the Foreign Exchange Management Act (FEMA). Visit Mutual Funds Sahi Hai for more information

Here's a little bit about myself. I've done a Masters in Economics and teach the subject to high school students. I am 32 years old and married to an investment advisor. A Dhoni fan who loves to play football! I am a sports enthusiast and a firm beli