India’s stable investment scene and growing economy have made it a great investment hub for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). Since the Indian diaspora is large and spread across major countries, it makes a substantial number of NRIs and their prominence towards the Indian investment scene paints a hopeful picture. The numbers give a clearer picture where over 72% of NRIs are looking to diversify their investment across India citing stable investment for both residents and non-residents alike.
But is investing in India as an NRI as simple as that? Aren’t there tons of legal caveats to fulfill and regulations to abide by? There is, but SBNRI helps you with the process of investments in India and makes it possible for you. These days, the investment scene has changed for good and NRIs have ample opportunities to invest in the Indian market, one of which is Mutual Funds. This NRI Mutual Fund KYC guide will help you with that.
Also read: Best SIP to Invest in 2024 – Top 10 SIP Mutual Fund Plans for NRIs/OCIs
Investing in Mutual Funds as NRI
NRIs can legally invest in Indian markets via mutual funds. This includes NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). There are a few legal mandates like getting their Mutual Fund KYC done along with adhering to the rules of FEMA, SEBI, and RBI. Once your KYC is done, you can invest in domestic and international mutual fund schemes offered by Asset Management Companies (AMCs).
Getting your Mutual Fund KYC is mandatory to open an account to invest in mutual funds in India irrespective of the investment amount. The Securities and Exchange Board of India (SEBI) has specified a set of regulations under the Prevention of Money Laundering Act (PMLA), 2002 which mandates that mutual fund houses and intermediaries perform their due diligence on investors before they are compliant to make investments. We’ll talk more about the Mutual Fund KYC down below.
For more info on NRIs, PIOs, and OCIs, you can refer here.
Also read: Step-by-Step Guide for NRIs to Pick a Winning Mutual Fund
How to get your Mutual Fund KYC done?
The entire purpose of NRI Mutual Fund KYC is to validate and verify the details submitted by the user in their investment application against the original documents. It is a mandatory procedure to be done for investing in financial instruments governed and regulated by SEBI. The process of KYC for NRI Mutual Fund can be done as follows:
- KYC Form: Submit the duly filled mutual fund NRI KYC form along with required supporting documents to the SEBI registered intermediate by courier/ post.
- Documents: You will also need to submit supporting documents alongside your duly filled KYC form.
What are NRI KYC documents for Mutual Funds to be submitted?
- Overseas address proof
- Permanent address proof
- A copy of your passport (Only relevant pages with name, DOB, and address)
- Recent photographs
- Current address proof (must)
NRIs working in the Merchant Navy must submit a mariner’s declaration or certified copy of the CDC (Continuous Discharge Certificate).
- Attestation: NRI or OCI applicants need to get documents attested by any of the following authorities: Officials of overseas branches of scheduled commercial banks registered with the RBI/ court magistrate/ public notary/ or Indian embassy/ consulate in the country of their residence.
- In-person verification (IPV): IPV is a requisite for mutual fund investors. For this, your AMC will re-validate your KYC info submitted online. The investor needs to appear in person with the original copies of the documents they have submitted online.
Also read: NRI Mutual Fund Taxation in India 2024 Explained
How to Check Mutual Fund KYC Status
Once you’ve submitted your NRI Mutual Fund KYC, you can check the status of the same with the SBNRI app with ease. This allows you to keep a tab on the progress and monitor the process of validation. You can also check on the KRA website to check the NRI Mutual Fund KYC status.
What next after Mutual Fund KYC?
Once your Mutual Fund KYC is complete, you can link your NRO/NRE account and start investing in mutual funds. Below are the documents required to link your NRO/NRE account with your Mutual Fund KYC:
- City and country of birth
- NRO/ NRE bank account statement/ canceled cheque for the last 3 months
- Nominee details
Note: NRI investment in mutual funds in India is subject to certain terms and conditions, and AMCs change their policies from time to time.
To know more about the NRO/NRE Bank account, please refer here.
How to Invest in Mutual Fund after your Mutual Fund KYC?
Congrats on getting your NRI Mutual Fund KYC done. You’re now eligible to invest in mutual fund schemes and start your wealth generation journey. NRIs can now download SBNRI App and choose to invest from 2,000+ mutual fund schemes in India with ease. Make your NRI mutual fund investing dream a reality with the SBNRI app today. Here’s how you can do it:
- Step 1: Set up your NRI account: You need to open an NRE or NRO account basis the type of earnings and savings you will be collecting. Both NRE and NRO are rupee-denominated bank accounts. Generally, NRE accounts are maintained to deposit your foreign earnings in India while NRO accounts are maintained to collect the earnings and income generated by NRI within India. Once your NRO account is activated, you can apply for the Mutual Fund KYC for further steps.
- Step 2: SBNRI allows KYC-compliant NRIs/OCIs to easily invest in mutual funds in India from their country of residence. You can simply download the SBNRI app and follow the procedures to start investing in mutual funds.
What are the Mutual funds Options for NRIs from the US and Canada
For NRIs located in the US and Canada, there are certain guidelines under FATCA that you need to abide by. Hence, limited AMCs are offering US NRI investment in mutual fund schemes. Here’s a list of them:
- Navi Nifty 50 Index Fund
- UTI Mastershare Fund
- Quant Active Fund
- Aditya Birla Sunlife Flexicap Fund
- Quant Small Cap Fund
What are the Mutual Funds for NRIs from Other Countries
Investing in mutual funds for NRIs located in other countries apart from the US and Canada is much easier as there are many mutual fund schemes that the user can choose from. Here’s a list of some of the best-performing mutual funds for NRIs to pick from:
| Funds | 1 Yr | 3 Yr | 5 Yr |
|---|---|---|---|
| SBI Small Cap Fund | 18.02 | 31.07 | 20.02 |
| UTI Nifty 50 Index Fund | 15.67 | 21.58 | 13.24 |
| Nippon India Small Cap Fund | 31.84 | 41.26 | 23.17 |
| Parag Parikh Flexi Cap | 22.50 | 23.77 | 19.02 |
| Kotak Emerging Equity Scheme | 16.68 | 29.66 | 19.06 |
| PGIM India Midcap Opportunities Fund | 6.79 | 29.25 | 21.05 |
*returns data as on 21 September 2023
How to Change Mutual Fund KYC Status to NRI
What if the user was a resident Indian and already had a KYC done as a resident but their residential status was changed to NRI recently? Will they be able to invest in the mutual funds or will they need a new KYC? This is an inherent query that many NRIs who have moved to new geographical locations abroad have. Here’s what happens in that case:
To become an NRI, you need to update your status from a ‘resident’ to an ‘NRI’ in the KYC records. You have to inform the mutual fund house where your investment is held. Since KYC details are centralized, the KYC information updated with one AMC would reflect across all mutual fund investments.
You need to file and submit a KYC form for changes in KYC status along with copies of PAN, passport, and local and foreign address proof. Here is the complete process of mutual fund KYC for NRIs.
You can approach an intermediary, like SBNRI, to get your KYC records updated without any hassle. It is important to note that you can make changes only after you become an NRI as per the Income Tax Act. Thus, you can’t complete the process before leaving India as a resident.
FAQs
Can NRI invest in mutual funds in India?
Yes. NRI can invest in mutual funds in India using their NRE/NRO bank account once they complete their Mutual Fund KYC.
How can NRI buy mutual funds in India?
NRI investors can purchase or sell mutual funds in India once they complete their Mutual Fund KYC and have an operating NRO/NRE Bank account.
How do I know my Mutual Fund KYC status?
You can check the status of your Mutual Fund KYC through the SBNRI app with ease.
Why do I need to get the NRI Mutual Fund KYC done?
Investing in mutual funds as an NRI requires a legally compliant KYC and adherence to the rules and regulations of SEBI, RBI, and FEMA. KYC acts as a legal validation of your current residential and tax status and allows you to invest in mutual fund schemes without any hassle.
What are the advantages of NRI Mutual Fund KYC?
NRI Mutual Fund KYC allows you to invest in mutual fund schemes offered by fund houses in India and continue your wealth-building process. Without the KYC, you will not be able to invest in the funds and avail financial gains and wealth creation.
What if my residential status is changed from Resident to NRI?
When your residential status is changed from resident to NRI, you need to update your KYC to change the records to continue investing in the mutual fund schemes in India. It is advised to change the status to avoid any hassle during the redemption process and may face penalties for the same.
