1. Can NRIs invest in mutual funds in India?
Yes, NRIs certainly can invest in mutual funds in India as long as they follow the guidelines of Foreign Exchange Management Act (FEMA). Mutual funds in India give you diversified portfolio with the right mix of debt and equity. For risk averse investors debt funds offer much higher interest rates. You can invest in equity, debt and balanced funds.
2. Benefits of mutual fund investments for NRIs
a. Easily manage mutual funds online from anywhere
With investing online, you can now easily track and manage your mutual fund portfolio from the comfort of your home anywhere in the world. Mutual fund investors can now buy, redeem, switch, can do systematic withdrawals or transfers online. You do not need to be physically present, or give cheques and DDs, physical forms or be in the same country! You regularly get account statements via email. AMC (Asset Management Companies) will also regularly send portfolio online to keep investors informed.
b. Higher returns from rupee depreciation
Due to the interest rate differential, dollar appreciating against emerging country currencies, you will see rupee depreciation. NRIs can get double benefits if they invest in mutual funds in India. While investing in Equities ypu benefit from rupee depreciation provided the investment is not repatriable
3. Process for NRIs to invest in India
In India AMCs cannot accept investments in foreign currency. Hence, a investor first needs to open an NRO, NRE or FCNR account with a bank and then proceed with the investments in the following manner
a. Do it Yourself
You can transfer funds yourself from your bank account through net banking after completing your KYC. Documents which need to be submitted for KYC are PAN card, passport, residence proof (aboard) and bank statement. You also have to indicate whether the investment is repatriable or non repatriable.
b. Via Power of Attorney
You can appoint another person via a power of attorney (PoA) to invest on your behalf. Most AMCs allow PoA holders to make investments and take investment decisions. But for KYC, documents of both the investor and the PoA are a must.
4. Mutual fund regulations for NRIs
a. Complete your KYC
In order to complete KYC, an NRI has to submit a copy of passport – pages which have names, DOB, photo and address. You have to give current address proof (where you are currently residing). Some mutual fund houses may also ask for In-Person verification.
b. FIRC (Remittance Certificate)
When you have made a transfer through cheque or DD you have to provide an FIRC certificate. In case, this is not available, then a letter from your bank would be sufficient. This is required to confirm the source of funds.
c. Redemption (proceeds from mutual fund investment sales)
The mutual fund house will deposit the sales proceeds (original investment + profit/loss) after you have sold off investments post deducting the requisite taxes. They can either give cheque or credit your NRO/NRE account directly. If the investment was non repatriable then proceeds will go to your NRO account.
5. NRI Mutual Fund Investors Tax Implications
NRI investors are afraid that they might have to pay double tax when investing in India. There is nothing to fear if your country has Double Taxation Avoidance Treaty (DTAA). For example India and the USA have signed this treaty which means if you have already paid tax in India you will not be taxed again in USA.
6. Top Mutual Fund Houses which accepts NRI investments
- SBI Mutual Fund
- Birla Sun Life Mutual Fund
- ICICI Prudential Mutual Fund
- UTI Mutual Fund
- HDFC Mutual Fund
- Sundaram Mutual Fund
- DHFL Pramerica Mutual Fund
- PPFAS Mutual Fund
- L&T Mutual Fund
7. Important points while investing in India
- You have the right of repatriation of funds invested and the amount earned only until you are an NRI.
- Residential address in the resident country (foreign country) is a must.
- The compliance requirement in the US and Canada is very strict and as per FATCA guidelines, all financial institutions must share the details of financial transactions involving a US person with the US Government.
Simply put the investment process for an NRI is simple and return on investment is pretty good, hence there is no reason you should not invest in the fastest growing economy in the world.
So, If you are an NRI, click here to create your Free for life NRI account with us to start investing in mutual funds. You can also call us on +91 73576 66615 or write to us on firstname.lastname@example.org.