Can NRIs invest in mutual funds in India?

Short Answer

Yes, any NRI can invest in mutual funds in India, if they follow some certain conditions under Foreign Exchange Management Act or FEMA Act 1999.

Detailed Answer

NRIs or Non-Resident Indians are the person of Indian origin who resides abroad for various official reasons such as employment, business, or simply living abroad. Many NRIs have a question in their mind is that if they are eligible to invest in mutual in India?

The short answer to this question is yes, only if an NRI fulfills certain criteria. India is a huge market and it has a lot of investment potential, as a result of these NRIs, even though they live abroad, they still depend on their home country India for investment opportunities. Here we are going to cover some key aspects of how an NRI can invest in mutual funds in India.

Can NRI invest in mutual funds in India?

As mentioned above, yes an NRI is eligible to invest in mutual funds in India under Foreign Exchange Management Act or FEMA Act 1999. The investments should follow the provisions mentioned in the FEMA Act. 1999. As per the Foreign Exchange Management Act, 1999 NRI is the person:

  • Who resides outside India who is either a citizen of India or a person of Indian origin (PIO).
  • Who has been in India for 182 days or more during a financial year.
  • Who has been in India for 365 days or more during the past four financial years.
  • Who has moved overseas for 180 days or more.

How an NRI can invest in mutual funds in India?

Now, as we know that NRIs are eligible for mutual fund investment in India. It is now time to understand the steps that need to be followed to invest in mutual funds in India if you are an NRI.

1. Account Set up

It must be noted, that Mutual fund Asset Management Companies of India will not accept investment in any foreign currency. So, the first step is to open an NRE or NRO account to invest in mutual funds in India. An NRI can invest on a repatriable or non-repatriable basis by using their funds from their NRE or NRO accounts.

2. Account KYC

All NRIs must complete their KYC formalities by filling up a form and submitting documents before starting their investment in Indian mutual funds. The papers need to be attested by an authorized official who can carry out in-person verification.

It must be noted that several mutual funds will not allow you to invest if you are residing in the USA or Canada due to the compliances under the Foreign Account Tax Compliance Act (FATCA). Therefore, if you reside in any of these countries, then you may need to fill in some additional documents.

3. Mutual Fund Application Form

Now the next step is to fill out the standard mutual fund application form to start investing in various mutual funds as an NRI. You must also make both FATCA and CRS declarations along with your application form.

4. Investment Mode

NRIs can carry out their mutual fund investments in two ways. One can either use the self-investment method or by using the Power of Attorney (POA) method. Here the POA holder also needs to complete their KYC formalities.

Payments for the investments can be made through a cheque drawn on the NRE or NRO account. One may also require submitting the foreign inward remittance certificate to confirm the source of their funds.

5. Steps to Redeem

The investments will be redeemed directly to the NRE or NRO account after deducting the tax at the source of the capital gains earned on any investment.

Conclusion

So we hope you got your answer regarding how can NRI invest in mutual funds in India? If you have any more queries, then feel free to comment down your queries below.

Tagged With: mutual fundsnri investmentnrimutual fund investment
Categories: NRI Investment
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