Indian Mutual Funds for NRIs from USA / Canada

While NRIs from other countries can invest in mutual funds in India without any hassle, US / Canada based NRIs are faced with 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.

Mutual Funds for NRIs from USA / Canada

Since the implementation of the Foreign Account Tax Compliance Act (FACTA), many AMCs (Asset Management Companies) have stopped accepting funds from NRIs residing in the USA and Canada because of lots of paperwork and compliance. Under the FACTA, financial players like AMCs, insurance companies and banks are required to provide their client information to the Government of India that will further be shared with the US/Canadian Government. However, there are still mutual funds for NRIs from USA/Canada to invest in India. Here are some options available:

• Sundaram Mutual Fund
• L&T Mutual Fund
• UTI Mutual Fund
• Aditya Birla Sun Life Mutual Fund
• Navi Mutual Fund
• ICICI Prudential Mutual Fund
• SBI Mutual Fund

Each of these AMCs sets different NRI mutual fund investment conditions to accept investment from NRIs in Canada and USA. While some mutual fund houses accept investment only in paper application forms, a few accept online applications. 

For example, AMCs like UTI Mutual Fund and Navi Mutual Fund currently accept digital declaration* from NRIs based in USA and Canada, and the rest accept physical declaration.

• Digital declaration accepted by: UTI Mutual Fund and Navi Mutual Fund
• Physical declaration accepted by: Rest of mutual fund houses that accept investment from the USA and Canada

Best Performing Mutual Funds for NRIs from USA / Canada

The following table shows some of the best-performing mutual funds for US / Canada NRIs:

Note: Returns up to 1 year are on an absolute basis & more than 1 year are on CAGR basis as on November 13, 2024

Rules for NRI Mutual Fund Investment

There are various investment options for NRIs in India, such as mutual funds, ETFs, stocks, bonds, etc. When investing in these assets, they need to adhere to rules set by the Foreign Exchange Management Act 1999 (FEMA). As per the provisions in FEMA, investments into the capital market in India are allowed only with the compliance of conditions like rupee-denominated NRI accounts (NRE / NRO), submitting KYC documents, etc. 

KYC Procedure for NRIs to Invest in Mutual Funds

1. Conventional method

2. SBNRI App

• KYC form: Submit the KYC form with all the necessary details along with the investment application form to the concerned authorities. 
• Documents: The following documents need to be submitted:
  • Overseas address proof
  • Indian address proof
  • A copy of passport
  • A recent photograph

NRIs in the Merchant Navy must submit a mariner’s declaration or certified copy of Continuous Discharge Certificate.

• Attestation: NRIs can get these documents attested by any of the following- the authorized officials of overseas branches of scheduled commercial banks registered in India, court magistrate/judge, public notary, or the Indian Embassy/Consulate General in the country of their residence. 
• In-Person Verification (IPV): For investment in mutual funds for NRIs, IPV is mandatory and can be done through video conferencing with the official representatives of the mutual fund house where you want to invest. 

Use SBNRI App to Invest in Mutual Funds Online

NRIs and OCIs can download the SBNRI app to invest in mutual funds online from the country of their residence. Here are a few simple steps:

• Complete your KYC: You can complete the seamless KYC process. Provide your personal details and attach supporting documents, like:
  • PAN Number
  • Overseas address proof: Any of – Water/ electricity bill, postpaid mobile/ internet bill, rent agreement, driving license, etc.
  • Passport – front and back
  • Passport size photograph

If all details are correct, your KYC will be approved within 7 to 10 business days.

• Onboarding: After KYC, you need to share the following details to complete onboarding process and start investing:
  • City and country of birth
  • NRE/ NRO bank account statement/ canceled cheque for the latest 3 months

Mutual funds for NRIs: Investment procedure

• Direct/Self-Investment: NRIs can invest in mutual funds in India directly through their NRE/NRO account. They can get copies of the mutual fund KYC forms available on the websites of mutual fund houses. They can also visit the Indian Embassy in the country of their residence to complete in-person verification.  
• Power of Attorney (POA): NRIs can also appoint a Power of Attorney on their behalf to invest in mutual funds in India. Make sure that the assigned POA is KYC-compliant.

Mutual Funds for NRIs from USA / Canada: FATCA Guidelines 

NRIs in Canada and USA are faced with a couple of compliance considerations to invest in mutual funds in India. The FATCA or the Foreign Account Tax Compliance Act requires all financial institutions to mandatorily share details of all transactions involving US citizens or NRIs with the US Government to ensure that there is no tax evasion. The Government of India has also signed an Inter-Government Agreement (IGA) with the USA to improve International Tax Compliance and implement FATCA. Hence, mutual fund houses must meet all compliance requirements. 

SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.

Frequently Asked Questions

Can NRI invest in Mutual Funds in India?

Yes, NRIs are allowed to invest in mutual funds in India. They need to meet certain requirements as per the guidelines of FEMA for being an NRI for investing in NRI mutual funds.

Which fund houses accept NRI investment in India?

Here are the mutual fund houses that accept investments from NRIs:

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

What happens to the mutual fund when I become an NRI?

You can hold the mutual funds even after your residential status changes. NRIs need to write a letter to their mutual fund houses along with proof of NRI bank account, KYC documents, passport and overseas address proof.

Why US and Canada NRI face restrictions when investing in mutual funds in India?

They face problems due to the compliance requirements by Foreign Account Tax Compliance Act (FATCA). It requires AMCs to provide the US government with information about transactions involving US citizens, including NRIs.

Can NRIs from US invest in SBI mutual funds?

Yes. SBI Mutual Fund allows NRIs to invest in mutual funds in India only through offline mode of transactions with an additional signed declaration by the investor.