How can NRI invest in Mutual funds in India? US/Canada and Other NRIs

Investing in mutual funds is a common investment option. Through this post, you shall get answers to common NRI queries. Can NRI invest in mutual funds in India? If yes, how’s it possible? How can NRI or Non Resident Indians invest in mutual funds in India? So, we shall share with you a list of Indian Mutual Fund Houses that accept investment from USA/Canada based NRIs.

What is a Mutual Fund?

Mutual fund refers to the money pooled in by a large number of investors and managed by professional fund managers. The money is invested in different financial instruments like debt and equity to earn returns thereon.

Just like a share has a share price, similarly in case of mutual funds each mutual fund unit has an NAV or Net Asset Value. Simply stating, NAV is the market value of each mutual fund unit i.e. the price at which investors buy and sell mutual fund units. When you invest in mutual funds, you are allotted units of mutual funds. So, you are the unit holder.

A Company that has been registered with SEBI and helps you in your investment decisions and manages the mutual funds is called Asset Management Company or AMC. All Asset Management Companies or AMCs are regulated by Securities Exchange Board of India (SEBI).

An AMC may have a number of mutual fund schemes and have professional fund managers to buy and sell securities in line with the respective fund’s objective.

Mutual funds are gaining popularity since the past few years. Investing in mutual funds is a great way to explore higher returns and grow your money in the long run.

You may also like our list of 7 Best Books on Mutual Funds Investing

How can NRI invest in Mutual Funds in India? US/Canada Based NRIs:

Investing in mutual funds is an attractive option for Non Resident Indians or NRIs as well. But, investment in mutual funds is not that simple for Non residents especially for the ones based in USA or Canada.

In fact, most of the Indian mutual fund houses do not accept investments from NRIs based in USA or Canada. This is due to the complex compliance requirements under FATCA or Foreign Account Tax Compliance Act.

Under FATCA , all the financial entities like banks, insurance companies and mutual fund houses are supposed to furnish their client information to Indian Government. This will further be shared with the US/Canadian Government.

This all involves a lot of paper work and compliance on the part of mutual fund houses. So, most of the mutual fund houses stopped accepting investments from NRIs based in US and Canada.

Also, if you are an existing investor, but you move from India to USA or Canada and become an NRI, the mutual fund house can stop accepting further payments from you.

However, if the mutual fund house is any of the one mentioned in the list as given below, and they do accept investments from US/Canada based NRIs, you need to fulfil all the additional requirements to continue your investments.

Now, there are few mutual fund houses that accept investments from US or Canada based NRIs also.

List of Indian Mutual Fund Houses that accept investments from US/Canada based NRIs:

1. Birla Sun Life Mutual Fund
2. SBI Mutual Fund
3. DHFL Pramerica Mutual Fund
4. UTI Mutual Fund
5. ICICI Prudential Mutual Fund
6. L&T Mutual Fund
7. PPFAS Mutual Fund
8. Sundaram Mutual Fund

Source:  Economic Times

Moreover, these fund houses might have their own conditions for accepting investments from US/Canada based NRIs.

Like, some of the above fund houses like Birla Sun Life Mutual Fund, ICICI Prudential and SBI Mutual fund shall allow investing only through offline transaction mode.

Further, you as an NRI have to give an additional signed declaration to the fund house as per their norms. While L&T Mutual Fund doesn’t allow investment in close ended funds.

How can NRI invest in Mutual Funds? From rest of the World:

In case of Non Residents from rest of the World ( other than based in US or Canada) the investing procedure is quite simplified. You can easily invest in mutual funds just like Indian resident investors. You are free to invest in any mutual fund in India subject to necessary documentation.

To invest in mutual funds, you are required to have NRE/NRO Account and the investment amount can be directly debited from these accounts. You cannot make investments in foreign currency.

You just need to meet the KYC Compliance and any additional declaration or documentation as per the fund house regulations. Hence, the Non Residents or NRIs from Singapore, Middle East,UK,Europe and so on, can freely invest in mutual funds in India.

Moreover, the Non residents Indians or NRIs can invest in mutual funds in India on a repatriable or a non-repatriable basis. But, these are subject to rules under FEMA or Foreign Exchange Management Act.

So, if you are Non resident Indian or NRI, you need not worry, you have a plenty of ways to plan your investments. Just make yourself aware of your financial objectives and go ahead in the right direction.

You may also like to know about Foreign Direct Investment in Canada

NRI Investment in Mutual Funds: A Final Note

Mutual funds is a great way to diversify your financial portfolio to reap higher benefits as compared to traditional investment options. But, mutual funds are subject to market risks. So, make yourself aware of all the pros and cons of investing in mutual funds.

Investments in mutual funds can be done through the lump sum method or through Systematic Investment Plan or SIP. In fact, SIP in mutual funds is considered as a good way to invest small amounts without much inconvenience.

Build a sound investment portfolio as per your risk appetite and investment horizon. Achieve your financial goals in a smooth manner.

If you are a Canadian investor and wish to start stock trading, do explore the List of Best Online Stock Brokers in Canada.

If you are thinking about your investment planning, don’t forget to explore 7 Best Investment options for NRIs. Do you want to add anything to help our readers in their investing? Feel free to share your valuable feedback in the comment section below!