Every NRI faces the
dilemma of investing back home or not at one point or another. If they choose
to skip investing, it may be hard to support dependants still in India or come
back to the country one day. On the other hand, the investment process and the
laws governing the process seem extremely complex.
This is exactly why
we’ve written this guide for you. Read on to know why you should invest in
Indian mutual funds, how you can do it, and the regulations you’ll need to
Why Should NRIs Invest in Mutual Funds in India?
Mutual funds have
emerged to be one of the most lucrative investment options in India. While
Indian residents are benefiting from these potions, even NRIs can take
advantage of this investment option in many ways. Here are the biggest benefits
NRIs can enjoy by investing in Indian mutual funds.
that you live in the UK and invest £1,000 in an Indian mutual fund at an
exchange rate of ₹100 to £1. If the rupee value appreciates, then you’ll get
more value for your investment. This is how an investor can really benefit when
the rupee value surges in comparison to the resident country’s currency.
in worst-case scenarios where the rupee value depreciates, you’ll still reap
sufficiently good returns thanks to the interest rate. It’s worth noting that
NRIs get the same benefits by investing in Indian mutual funds as they would
get in their own country of residence.
big reservation for any NRI investor is the issue of managing the fund from
abroad. You may hesitate from the entire investment itself if it means you have
to issue cheques, make DDs, fill in physical forms, and generally stay in the
country or visit it frequently.
mutual funds investments in India have advanced to the point where everything
can now be online. You can buy, redeem, switch, and even opt for systematic
transfer of withdrawals online. Asset Management Companies post portfolio
disclosures online to keep investors informed and you’ll receive regular account
statements (CAS) via emails. Therefore, you can track and manage your mutual
fund directly from your resident country. It’s almost as easy as betting on cricket using apps.
How Can NRIs Invest in India?
It’s a given that
mutual funds investments in India are not very straight-forward for NRIs.
(After all, that is why we’re writing this blog.) This is because Asset
Management Companies in India are not allowed to accept investments in foreign
currencies. Therefore, before you even think about making any investments, you
need to open an NRO account, NRE account, or a Foreign Currency Non-Resident
(FNCR) account with an Indian bank. Thereafter, you can take one of two paths.
can complete debiting, crediting, or other transactions through normal banking
channels. Your application must indicate whether you’re investing on a
repatriable or a non-repatriable basis. You’ll also need to submit your KYC details
along with the application. Keep documents like attested copies of PAN card,
latest photograph, passport, bank statement, and residence proof (outside
India) handy. If the bank requires an in-person verification, you can visit the
Indian Embassy in your resident country for the same.
the above step is a hassle for you, you can have someone else invest on your
behalf. Mutual fund companies allow Power of Attorney (PoA) holders to make
investments and even decisions about those investments on your behalf. For this
method to work, both the NRI and the PoA should sign the KYC documents.
Regulations to Follow for NRI Investments
Here are the three
regulations you need to strictly adhere to to make Indian mutual fund
investments as an NRI.
mandatory to complete your KYC process for Indian investments. You’ll need to
produce the following documents: a copy of your passport, date of birth, photo,
and address. Some fund houses may insist on in-person verification.
necessary for you to confirm the source of your funds while making payments via
a cheque or a draft. For this, you’ll need to attach a Foreign Inward
Remittance Certificate (FIRC) with it. If it’s not possible to do so, you can
simply issue a letter from the bank as well.
are various your redemption can be processed. Most likely the AMC will credit
your corpus (investment + gains) after fund redemption to your account after
deducting taxes. As an alternative, you may also receive a cheque for the same.
Some banks even allow the redemption to be credited directly to the NRO/NRE
account. Note that if you opt for non-repatriable investment, only an NRO
account redemption is possible.
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