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

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

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

Also Read: NRI Mutual Fund: The Basic 2022 Guide

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 compliances on the part of mutual fund houses. Under the FACTA, financial players like AMCs, insurance companies and banks are required to furnish their client information to the Government of India that will further be shared with the US/Canadian Government. However, there are mutual funds for NRIs from USA/Canada to invest in India. Here are some of the mutual fund investment options for NRIs based in the USA and Canada:

  • Nippon India Mutual Funds
  • UTI Mutual Fund
  • Navi Mutual Fund
  • PPFAS Mutual Fund
  • Axis Mutual Fund
  • Aditya Birla Sun Life Mutual Fund
  • SBI Mutual Fund
  • ICICI Prudential Mutual Fund

Each of these AMCs sets different NRI mutual fund investment conditions to accept investment from NRIs in Canada and the USA. While some mutual fund houses accept investment only in paper application forms, a few accept online applications through NSE NMFII or BSE STAR MF platforms. 

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

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

*NRI investment in mutual funds in India is subject to certain terms and conditions, and AMCs change their policies from time to time.

Best Performing Mutual Funds for NRIs from USA/Canada

The following table shows some of the best-performing mutual funds for US/Canada NRIs, based on past 3-year returns:

Funds3 Mo6 Mo1 Yr3 Yr5 Yr2021
Nippon India Small Cap Fund21.316.314.937.218.974.3
UTI Mid Cap Fund22135.728.613.543.1
UTI Transportation & Logistics Fund2131.830.322.96.424.3
UTI Healthcare Fund7-2.7-13.223.112.419.1
UTI Equity Fund17.84.1-5.922.114.834
Navi Large & Mid Cap Fund – Direct Plan18.586.187.3120.6913.79
ICICI Prudential Smallcap Fund17.610.810.830.915.861
SBI Small Cap Fund2314.416.831.718.747.6
Best performing mutual funds for NRIs based in USA/Canada

Note: Returns up to 1 year are on an absolute basis & more than 1 year are on CAGR basis as on 15 Sep 2022.

NRIs living in the US and Canada can download SBNRI App to choose from 100+ mutual fund schemes in India or to ask any questions related to mutual fund investment in India.

SBNRI is an authorised Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671

Rules for NRI Mutual Fund Investment

There are a variety of investment options for NRIs in India, such as mutual funds, exchange-traded funds (ETFs), stocks etc. When investing in these financial instruments, 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 opening of 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: NRIs need to 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 intend 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 . Type in 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

Also Read: How NRI invest in India: Mutual Funds and Real Estate

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. Or they can 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. Both your signatures should be on the KYC documents that you submit to the respective mutual fund company. 

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. It is to ensure that there is no deliberate tax evasion on the income earned by US citizens overseas. 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. 

NRI Mutual Fund: Expert Assistance

SBNRI is an authorised Mutual Fund Distributor platform & registered with Association of Mutual Funds in India (AMFI). ARN No. 246671

Before investing in Indian market, NRIs must consult market experts to make informed decisions. You can get detailed mutual fund advice from experts at SBNRI. You can download SBNRI App from the Google Play Store or App Store to ask any questions related to mutual fund investment, NRI account opening online, and tax filing in India. To ask any questions related to Mutual Funds, click on the button below. Also, visit our blog and YouTube channel for more details. 

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FAQs

Can NRI invest in Mutual Funds in India?

The common doubt in the minds of NRIs is whether they can invest in mutual funds in India? The answer is 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 is the checklist of mutual fund houses that accept investments made by 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. 

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