How can NRIs invest in mutual funds in India?

mutual funds

Non-Resident Indians (NRIs) don’t live in India but can access financial tools to strengthen their financial health. They can open savings accounts as well as invest in mutual funds whenever they want. The Indian market provides an excellent opportunity for NRIs to grow their wealth and accumulate a substantial corpus.

While NRIs can invest directly in stocks if they have the expertise, a mutual fund for NRIs is a cost-effective and intelligent solution. This article covers all the details about NRI investment in mutual funds and the crucial steps NRIs must follow to invest in the country of residence.

Can NRI invest in mutual funds?

While many NRIs may be periodically investing money in the Indian market, they may be confused about whether they can do so in mutual funds. Fortunately, NRIs, PIOs (Persons of Indian Origin), and OCIs (Overseas Citizens of India) can buy mutual funds in India if they adhere to specific rules as stated by the FEMA (Foreign Exchange Management Act). A SIP (Systematic Investment Plan) for NRIs is another way of investing in mutual funds at your convenience.

However, few mutual fund houses may not accept applications from NRIs based in Canada and the USA owing to the tedious documentation required as per FATCA (Foreign Account Tax Compliance Act). It is best for NRIs based in Canada and the USA to check with the mutual fund house before investing in mutual funds in India.

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How can NRIs invest in mutual funds in India?

There are a few vital steps NRIs must follow if they are looking to invest in a mutual fund. The initial step is to open any of the below-listed bank accounts with any Indian bank:

  • FCNR (Foreign Currency Non-Resident ) Account
  • NRO (Non-Resident Ordinary Rupee) Account
  • NRE (Non-Resident External) Account

Once NRIs have opened any of the bank accounts mentioned above, they must complete their KYC. To complete their KYC process, they must ensure they follow the steps mentioned below:

  • KYC form – NRIs must submit a filled-out KYC form to the Securities & Exchange Board of India (SEBI). They must submit their KYC form and required documents by post/courier.
  • Documents – The documents NRIs must submit for investing in a mutual fund are overseas address proof, a copy of their passport, domestic/Indian address proof, current photos, a copy of their PAN card and bank statements.
  • Attestation – NRIs must get their required KYC documents attested from specific authorities like authorised officials of scheduled banks registered with the Reserve Bank of India (RBI), public notary, judge/court magistrate, or consulates/Indian embassy.
  • IPV (In-person Verification) – In-person verification is a must-step for mutual fund investment for NRIs. They must connect with the representative of the fund house for this process through video conferencing.

If you are an NRI looking to invest in mutual funds in the Indian market-, note that while the process may contain hassles initially, the investment return would be worth the hassle over the long run.

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