How can NRI invest in Mutual Funds in India?

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Assume four friends want to buy a 12-piece box of chocolate for Rs.100/- but only have Rs.25/- between them. They decide to pool their funds to purchase the box and then give three chocolates to each participant based on their contribution.

This is the fundamental model on which Mutual Funds function. The fund is represented by the chocolate box, and the chocolates are units. You purchase units of the fund with a Net Asset Value (NAV). The value of this NAV fluctuates over time as a result of the fund’s growth, resulting in your gains.

Can non-resident Indians invest in Indian mutual funds?

A frequently asked topic is whether NRIs can invest in mutual funds in India. Yes, NRIs and PIOs can invest in Indian mutual funds as long as they follow the restrictions of the Foreign Exchange Management Act (FEMA).

NRIs can invest in mutual funds in India both repatriation and non-repatriation. However, just a few asset management companies (AMCs) in the United States and Canada accept mutual fund applications from NRIs. As a result, NRIs from these countries must exercise caution when investing in Indian mutual funds.

When it comes to investing, NRIs receive the majority of the same perks and conveniences as domestic investors. Depending on their investment objectives and risk tolerance, they can invest in equity funds, debt funds, or hybrid funds. NRIs can repatriate the redemption proceeds whenever they want.

Benefits of mutual funds for NRIs

India is one of the world’s fastest developing major economies, attracting massive international investment. NRIs can also contribute to India’s growth, and investing in mutual funds is an appealing option for non-resident individuals with dependents in India.

Here are some of the major advantages that NRI mutual fund investors can reap by investing in Indian mutual funds.

NRIs can invest in mutual funds and manage their portfolios from the comfort of their own homes. NRI mutual fund investors can purchase, redeem, and transfer units of various mutual fund schemes. They can also choose to make systematic online transfers from one scheme to another, as well as withdraw money online.

You are not required to issue cheques or DDs, submit physical forms, or be physically present in India. You will also receive consolidated account statements (CAS) through email on a regular basis. Mutual fund companies also publish their portfolio holdings online once a month to keep their investors up to date.

How can a non-resident Indian(NRI) invest in mutual funds in India?

According to FEMA criteria, there are some conditions for becoming an NRI, which are as follows:

1. An NRE/NRO Bank Account: An NRI’s funds can only be managed in India through NRE or NRO Bank Accounts. As a result, it is required for an NRI to invest in mutual funds through one of these accounts.

2. Documentation: In order to invest in mutual funds in India, you must submit a series of paperwork. The following documents are required for Mutual Funds Know Your Customer (KYC) for NRIs:

  • KYC Form, fully completed and signed
  • Passport and PAN Card are acceptable forms of identification (Self-Attested)
  • Address proof is required for NRIs. (Includes both correspondence and abroad address)
    NRE/NRO Account Cheque Cancelled

NRIs can now invest in mutual funds online via direct transactions from their NRE/NRO accounts, or they can appoint a Power of Attorney (PoA) to invest money on their behalf. It is important to note that in the event of a PoA, the signatures of both the NRI Investor and the PoA must be present on the KYC document.

3. KYC/Attestation (In-Person Verification): For NRIs, the verification is performed by a certified body to confirm that the investor possesses all of the original documents indicated in the KYC Form. It is possible to accomplish this by following the steps below:

  • The IPV can be performed seamlessly during a video call (Skype, etc.). Previously, NRIs were required to attend the offices or have someone come to their home or business to check the documents.
  • You can select a time for the video call with the agencies and move on with the IPV. Only the following entities are authorised to do IPV:
  1. KYC registration service provider (KRA)
  2. The AMC’s (Asset Management Companies in India) Mutual fund representative
  3. Distributor or advisor of mutual funds
  4. CAMS or Karvy, MF’s registrar transfer agent
  • Major agencies now have smartphone apps for fast authentication via biometrics or OTP.
  • The video call may contain questions concerning the information you provided on the form, and the application may be cancelled if any contradictions occur.

NRI Mutual Fund investments are restricted; not all agencies accept NRI investments. However, there are few Mutual Fund Houses that accept payments from NRIs:

Which Indian Fund Houses Accept NRI Investments

Here is a list of Mutual Fund Houses that accept investments from NRIs:

  • DHFL Pramerica Mutual Fund
  • Birla Sun Life Mutual Fund
  • ICICI Prudential Mutual Fund
  • HDFC Mutual Fund
  • SBI Mutual Fund
  • UTI Mutual Fund
  • L&T Mutual Fund
  • PPFAS Mutual Fund (Parag Parikh Financial Advisory Services)
  • Sundaram Mutual Fund

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