NRI Mutual Fund

Mutual Funds investments for NRI is a very sought after tool in India. Mostly, NRIs aren’t aware that they can invest in Indian Mutual Funds and that too without any hassle. NRI Mutual Fund can be one of the best investment vehicles in India given its flexibility.

 

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. 

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 gains 1 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*

Reliance NRI Equity Fund

Reliance NRI Equity Fund

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Indian market is turning more bullish every day. This is the right opportunity for NRIs to invest in mutual funds and equity stocks in India. Non-Resident Indians can invest in Reliance equity funds to get optimal returns. Reliance NRI Equity Fund is a mutual fund scheme that invests in stocks of high-growth companies in the BSE top 200 index. The fund is known for its spectacular performance in recent years. Reliance NRI equity fund has the freedom to invest in other stocks listed on the BSE Index.

How can NRI invest in mutual funds in India?

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The Indian stock market is a great opportunity for NRIs to grow their wealth back in India. Although NRIs can invest in stocks directly if they have the expertise, investing through mutual funds is a smart and cost-effective solution for all types of investors. In this article, we will analyze how can NRI invest in mutual funds in India, along with the process and regulations.

10 Best International Mutual Funds to Invest in 2021

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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.

Things NRIs should keep in mind when investing in Mutual Funds

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Before a few years, NRIs would only invest in fixed deposits and real estate. Since India is on its way to becoming a superpower in the world economy, NRIs have already started exploring other investment options in India, such as mutual funds, liquid funds, direct equity, bonds and government securities, etc. Investing in mutual funds gives NRIs opportunities to build a diversified portfolio of equity and debt in India, their home country. The investment process is online, can be done at any time and from anywhere. Moreover, NRIs can easily offset the losses on one currency with the gains on the other, from the comfort of their home. As an NRI investor, you need to abide by certain limitations and rules for safe and profitable investment. Here are things NRIs should keep in mind when investing in mutual funds in India.

HDFC Mutual Funds for NRIs to Invest in India

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HDFC Asset Management Company Ltd. is one of the most popular fund houses in India that offers a wide range of mutual funds to resident as well as NRI customers. Indians living abroad can invest in HDFC Mutual Funds for NRIs to get the advantage of diversification, liquidity, professional management, etc. HDFC offers different types of mutual funds for NRIs including growth funds, or even retirement funds to cater to investors from all walks of life.

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Mutual Funds for NRIs in Singapore to invest in India

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Mutual Funds for UAE-Based NRIs to Invest in India

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Mutual Funds for NRIs in Germany to invest in India

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Mutual Funds for NRIs in Australia to Invest in India

Mutual Funds for NRIs in Australia to Invest in India

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Indians are the third largest migrant group in Australia. Many Indians have been migrating to Australia for study and jobs over a couple of years. Indians in Australia, including NRIs and PIOs (Persons of Indian Origin), are eligible to apply for various financial and banking services in India, such as NRI bank accounts, investment in stocks, mutual funds and exchange-traded funds (ETFs), etc. However, unlike resident Indians, there are limited mutual funds for NRIs in Australia. NRIs who want to invest in mutual funds in India have to follow some important rules and guidelines in Foreign Exchange Management Act (FEMA).