NRI Mutual Fund

Mutual funds are one of the most preferred options for investment in India by NRIs. Investment in mutual funds enables non-resident Indians to invest in equity, debt or liquid funds. However, the investment procedure for NRIs is slightly different from that for resident Indians. Before investing in mutual funds in India, NRIs must know about the mutual fund schemes they can invest in, investment procedure, regulations and tax on capital gains. Here are the important details of the NRI mutual fund.

What are mutual funds?

Suppose there are four friends who want to buy a 12 piece box of chocolate priced at Rs.100/- but all of them have Rs.25/- only. They decide to pool their money and buy the box and then distribute 3 chocolates each based on their contribution.

This is a very basic model on which Mutual Funds operate. The box of chocolate here is the fund and chocolates are units. You buy certain units of the fund which has a Net-Asset Value (NAV). The value of this NAV changes with time based on the fund’s growth resulting in your gains.

Can NRI invest in Indian mutual funds?

Can NRIs invest in mutual funds in India is a common question. The simple answer is yes NRIs, as well as PIOs, can invest in Indian mutual funds provided they adhere to the regulations of the Foreign Exchange Management Act (FEMA).

NRIs can invest in mutual funds in India on repatriation as well as a non-repatriation basis. However, there are only a few asset management companies (AMCs) that accept mutual fund applications from NRIs in the USA and Canada. So, NRIs from these countries must check when investing in Indian mutual funds. 

NRIs are offered most of the benefits and conveniences as resident investors while investing. They can invest in equity funds, debt funds, or hybrid funds depending on their investment goals and risk tolerance. NRIs can repatriate the redemption proceeds as and when they wish to. 

Benefits of mutual funds for NRIs

India is one of the fastest growing major economies in the world, attracting staggering foreign investment. NRIs can also be a part of India’s growth and for non-resident individuals who have dependents in India, investment in mutual funds is an attractive proposition.

Here are some of the key benefits that NRI mutual fund investors can enjoy by investing in Indian mutual funds. 

Ease of investing and monitoring 

NRIs can invest in mutual funds and manage their portfolio online from the convenience of their home. NRI mutual fund investors can buy, redeem and switch units of different mutual fund schemes. They can also opt for systematic online transfers from one scheme to another and or withdraw online.     

You don’t have to issue cheques, DDs, submit physical forms, or be present in India. You will also receive consolidated account statements (CAS) regularly through emails. Mutual fund houses also disclose their portfolio holdings online every month to keep their investors informed.

How can NRI invest in Mutual Funds in India?

There are certain requirements based on the guidelines of FEMA for being an NRI for doing the same which are:

1. An NRE/NRO Bank Account: For an NRI, their funds can only be managed through the NRE or NRO Bank Accounts in India. Therefore, it is mandatory for an NRI to carry out investments in Mutual Fund using either of these accounts

2. Documentation: There is a set of documents that you must produce in order to invest in mutual funds in India. The following documents are needed for Know your Customer (KYC) of Mutual Funds for NRIs:

  • Completely filled and signed KYC Form
  • Identity Proof: Passport and PAN Card (Self-Attested)
  • Address Proof: Mandatory for NRIs. (Includes both correspondence and overseas address)
  • Cancelled Cheque of NRE/NRO Account

Now, NRIs can either invest in mutual funds online through direct transactions from their NRE/NRO Accounts or they can get a Power of Attorney (PoA) to invest money on their behalf. A thing to note here is that in case of a PoA, the signatures of both the NRI Investor and the PoA is required to be present on the KYC Documents. 

3. KYC/Attestation (In-Person Verification): The verification is done for NRIs by a certified entity for the acknowledgement of the fact that the investor has in his/her possession, all the original documents that he/she has mentioned in the KYC Form. It can be done by the following process:

  • The IPV can be done seamlessly on a video call (Skype, Appear.in etc.). Earlier, NRIs were required to visit the offices or someone visited the investor to verify the papers at their home or workplace
  • You can set a time for the video call with the agencies and carry on with the IPV. Only the following entities have the authorization to carry out IPV:
  1. KYC registration agency (KRA) 
  2. The AMC (Asset Management Companies in India) Mutual fund agent 
  3. Mutual fund distributor or advisor 
  4. MF’s registrar transfer agent like CAMS or Karvy
  • Major agencies have their mobile apps now for instant authentication through biometrics or OTP
  • The video call might include questions about the details you have filled in the form and the application can be cancelled if any contradictions occur

NRI Mutual Fund investments are specific, every agency doesn’t allow investments from NRIs. Although, there are certain Mutual Fund Houses accepting 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

Taxation Rules for NRI Mutual Fund Investments

Taxation is a very crucial aspect in any asset class. The taxation on Mutual Funds is almost the same for NRIs and Residents. Different types of Mutual Funds are taxed differently for NRIs: 

*(Equity Funds: An equity fund is a mutual fund that invests principally in stocks)

*(Debt Funds: A debt fund is a mutual fund that invests in fixed-interest generating securities such as corporate bonds, government securities etc.)

*(Minimum Holding Period: It is a stipulated period defined to differentiate the gains as long term and short term. Assets held for less than minimum holding period will be taxed on short term and assets held for more than the minimum holding period will be taxed on a long term basis)

Nature of Profits / Income

Equity Funds*Debt Funds*
Minimum Holding period* for Long term capital gains1 year

3 years

Short term capital gains taxation

15% + 4% cess* = 15.60%

As per the tax rate of the investor (30% + 4% cess = 31.20% for investors in the highest tax slab)

Long term capital gains taxation

10% + 4% cess = 10.40% (if the long term gain exceeds Rs 1 Lakh)

(long term gains up to Rs 1 Lakh is tax-free) 

20% with indexation*

Mutual Funds for UAE-Based NRIs to Invest in India

Mutual Funds for UAE-Based NRIs to Invest in India

10,301 views

Indian diaspora constitutes the largest population of the UAE, approximately 33% of the country’s population. NRIs living in UAE can invest in mutual funds in India to achieve their short and long-term financial goals, such as the purchase of house, child’s education, retirement, etc. However, there are some important guidelines and rules related to investment in mutual funds by NRIs. They need to adhere to Foreign Exchange Management Act (FEMA) to invest in mutual funds in India. Here are some of the best mutual funds for UAE-based NRIs along with guidelines.

What Happens to Mutual Funds When You Become NRI?

What Happens to Mutual Funds When You Become NRI?

1,536 views

It is common that Indians move abroad for jobs or education, and attain NRI status after spending a few months outside India during a financial year. Many people invest in different financial avenues in India, such as fixed deposits, mutual funds, stocks, etc. before leaving India. Then get confused about what to do with their investments in India. For example, one of the common queries that we receive is what happens to mutual funds when you become an NRI?

High Risk Mutual Funds in India 2023

High Risk Mutual Funds in India 2023

1,044 views

The rate of risk associated with mutual fund investment is categorized as low, moderate and high. High-Risk mutual funds refer to funds, usually invested in stocks of small & medium sized companies, that have a potential of delivering higher returns in the future. In other words, high-risk funds tend to have higher risk for investors, but they also have excellent potential and ability to provide high returns. Investors willing to take high risk are required to actively review the performance of these funds from time to time. Here you will learn about the top best high-risk mutual funds in India ranked by last 5-year performance.

Mutual Funds for NRIs from UK to Invest in India

Mutual Funds for NRIs from UK to Invest in India

8,982 views

NRIs are spread across the world from the Middle East to the UK and the USA. There are about 3.25 lakh NRIs living in the United Kingdom. Once they begin earning a decent income, Indians living abroad explore investment options for NRIs in India. Mutual funds are a great option to earn higher income as compared to traditional investment options. There are some important guidelines and rules that need to be followed to invest in mutual funds in India for NRIs. UK-based NRIs are also required to adhere to rules set by the Foreign Exchange Management Act (FEMA) to invest in NRI mutual funds.

Mutual Funds for NRIs from USA/Canada to Invest in India

Mutual Funds for NRIs from USA/Canada to Invest in India

19,358 views

Unlike NRIs from other countries, USA/Canada NRIs are faced with certain cumbersome compliance requirements under FACTA (Foreign Account Tax Compliance Act) to invest in mutual funds in India. Nevertheless, many mutual fund houses allow NRIs based in the USA and Canada to invest in India in a hassle-free manner, but the options are limited. Let’s look at the mutual funds for NRIs from USA/Canada to invest in India.

10 Best International Mutual Funds in India 2023

10 Best International Mutual Funds in India 2023

30,732 views

International mutual funds are funds, which predominantly invest in stocks of companies listed out of India, such as Google, Facebook, Apple, Amazon, Barclays, Deutsche Bank, Novartis, etc. Also known as foreign funds, many international mutual funds are fund of funds schemes. Due to volatile local markets and ups and downs in an economy, international mutual funds have become popular among investors in the past few years. Here are the 10 best international mutual funds for individuals looking to participate in the international market. Residents as well as NRIs can invest in these funds.

KYC for NRI Mutual Fund: Online Process & Documents Required

KYC for NRI Mutual Fund: Online Process & Documents Required

606 views

Non-Resident Indians who wish to invest in mutual funds in India to diversify their portfolio need to complete KYC for NRI mutual fund as a non-resident Indian. The process of KYC for NRIs is slightly different from that for residents. Here are some steps you need to follow:

Which is the Oldest Mutual Fund in India?

Which is the Oldest Mutual Fund in India?

763 views

Everyday several new mutual fund schemes hit the market, adding to confusion among investors about decision-making. Apart from the returns offered by a mutual fund scheme, consistency over years is an essential factor to be considered for decision making. While many mutual funds deliver high returns over a short-term time, there are a very few mutual funds that have consistently churned out returns over a prolonged time. Among 45 mutual fund houses in India, let’s take a look at the oldest mutual fund houses in India.

Money Control MC30 Top Performing Mutual Funds in India 2022

Money Control MC30 Top Performing Mutual Funds in India 2022

431 views

MC30 is a curated basket of top mutual fund schemes from key categories. Based on your risk appetite and investment goals, you can choose for long term or short term, moderate, risky and very risky investment options from MC30 Funds listed below.

Rs. 10K SIP in These Funds Has Generated up to Rs. 8.9 cr Returns

Rs. 10K SIP in These Funds Has Generated up to Rs. 8.9 cr Returns

424 views

Mutual funds are an ideal option for long-term wealth creation. In India, there are more than 235 equity diversified mutual fund schemes, including 31 schemes that have completed 25 years. Here are top 25-year old equity diversified mutual fund schemes that have delivered stellar returns. Systematic investment plans (SIPs) in these funds have multiplied investors’ money by up to 28 times over the last 25 years. Non-Resident Indians looking to create wealth through NRI mutual funds need to add some of these funds to their portfolio.