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. This blog contains an overall guide on NRI Mutual Fund KYC along with the latest NRI Re-KYC rules implemented from April 1, 2024.
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.
Also read: Best SIP to Invest in 2024 – Top 10 SIP Mutual Fund Plans for NRIs/OCIs
Acceptable Offical Valid Documents for NRIs to Validate Mutual Fund KYC (W.E.F. April 1, 2024)
Below is the list of documents that are acceptable official valid documents for NRIs to validate their mutual fund KYC or do Re-KYC:
- Passport Size Photo
- PAN Card
- Aadhar Card
- Passport/PIO Card/OCI Card
- Current Overseas Address Proof
Note: All of these documents should be self-attested by the user.
Many NRIs are facing issues with mobile number validation due to newfound rules of Aadhar-based validation. However, it should be noted that as per the regulation, NRIs/OCIs with foreign numbers are exempted from the Aadhar-linked OTP verification requirements provided their PAN reflects NRI status. It is expected that a resolution will be provided in due course helping ease mutual fund investments for NRI.
NRIs working in the Merchant Navy must submit a mariner’s declaration or certified copy of the CDC (Continuous Discharge Certificate).
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.
Latest NRI Mutual Fund KYC Norms Rule effective April 1, 2024
The recent changes in the KYC norms, implemented from April 1st, have introduced strict rules on the KYC validation process requiring Aadhar validation. While these norms came in as a measure to enhance security and compliance, these mandatory changes have affected a lot of investors (both residents and non-resident Indians) when it comes to investing in Indian mutual funds. When you visit KYC Registration Agency (KRA) website, you may see your Mutual Fund KYC status will be displayed on the screen. It will showcase the status either as ‘On Hold’, ‘Validated’, ‘Registered’, or ‘Rejected’.
What does Mutual Fund KYC Status ‘On Hold’ Mean?
If your mutual fund KYC status shows as ‘On Hold’, then it restricts you from making any new investments in mutual funds like lump sum or Systematic Investment Plan (SIP). If your mutual fund KYC status shows ‘On Hold’, then it may be because of these reasons:
- Submission of non-valid documents, i.e. utility bills
- Non-linking of PAN and Aadhar
- Non-updation of correct contact details
Also read: PAN-Aadhaar Linking for NRI: Is it Mandatory?
What does Mutual Fund KYC Status ‘Registered’ Mean?
- If your mutual fund KYC status shows as ‘Registered’ then you don’t have to worry about anything. You can invest and redeem from your existing AMC via whom you had made investments. However, you cannot invest in schemes from new AMCs. For such new investments in different schemes provided by other AMCs, you need to modify your KYC online.
What does Mutual Fund KYC Status ‘Validated’ Mean?
- If your mutual fund KYC status shows as ‘Validated’ then you are KYC compliant and need not worry about redoing your KYC again. You can invest, redeem and further make new investments across any schemes offered by various fund houses.
How to validate mutual fund KYC for Non-Resident Indians (NRIs)?
- With the recent changes in the KYC norms and the decrease in the acceptable official valid documents for NRIs, they have to complete their KYC via Aadhar. In the absence of such, their KYC status will showcase ‘KYC Registered’ allowing them to make investments in the existing schemes of fund houses but cannot make future investments with different fund houses. You can also submit your physical KYC form along with a copy of your Aadhar card to the fund house for validation of your KYC.
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.
How to check KYC for mutual fund?
- Here’s how you can check KYC for mutual fund:
- Visit CVL KRA website, i.e. www.cvlkra.com
- Go to the “KYC Inquiry” tab, enter your Permanent Account Number (PAN), and click on submit.
- Your Mutual Fund KYC status will be displayed on the screen. It will showcase the status either as ‘On Hold’, ‘Validated’, ‘Registered’, or ‘Rejected’.
How do I verify my KYC verification?
- You can visit the CVL KRA website or any other KRA agency website and follow the steps mentioned in the above blog to verify Mutual Fund KYC.
How do I activate my KYC in mutual funds?
- You need to validate your KYC to activate it. As per the new KYC norms implemented from April 1, 2024, mutual fund investors need to verify mutual fund KYC to validate it. You can check your KYC status by visiting CVL KRA or any other KRA agency website. Once your KYC status is shown, you can validate it by following the steps mentioned in the above blog.
Is KYC mandatory in MF?
- Yes, KYC is mandatory for mutual fund investments. In absence of KYC validation, investors cannot make any investments in the mutual funds.
What is KYC details for mutual fund?
- KYC details for mutual funds mean the documents submitted by the user for the KYC validation process. This includes PAN Card, Aadhar Card in case of residents. For NRIs, it includes Passport/OCI Card/PIO Card, Current Address Proof.
Can we verify KYC online?
- Yes you can verify mutual fund KYC online by visiting any KYC Registration Agencies website. You can also follow the steps mentioned above in this blog to verify mutual fund KYC and validate it.
