Mutual fund investing norms for NRIs

Non-Resident Indians (NRIs) are allowed to invest in Mutual Funds in India. We answer some queries on the investing norms for NRIs.

Can a Non-Resident Indian (NRI)/Person of Indian Origin (PIO) invest in Mutual Funds? Can NRIs from any country invest?

Yes. NRIs and PIOs can invest in Indian mutual funds. However, some mutual funds may not allow NRIs from certain countries to invest. NRIs must read the Scheme Information Documents/Statements of Additional Information to get information in this regard or contact the mutual funds.

Please explain the guidelines for investing in mutual funds by an NRI.

NRIs can invest in Indian mutual funds through their NRE/NRO/FCNR account. The investment has to be made in Indian rupees only. He/she may also send a rupee cheque from abroad payable in a bank in India. The investor status in the form should be marked as NRI and the bank details of his/her NRE/NRO account have to be mandatorily provided. For an NRI to invest, it is mandatory that he/she maintains a bank account in India. AMCs do not accept an NRI application with an overseas bank account detail. NRIs should be ‘know your customer’ (KYC) compliant to invest in a mutual fund.

Can NRIs invest on a repatriable basis?

To invest on a repatriable basis, the amount representing investment should be received by inward remittance through normal banking channels (cheque/rupee denominated DD if from an overseas account) or by cheque drawn on or debited to an NRE/FCNR account of the non-resident investor along with FIRC (foreign inward remittance certificate).

Redemption proceeds/Dividends will be credited to the NRE bank account or paid out by cheque in Indian rupees. The redemption proceeds and/or dividend can be repatriated in full.

How can an NRI redeem investments?

The redemption proceeds will get processed in the normal course by submitting the redemption request form. The redemption proceeds will be paid by cheque or credited to the first unit holder’s bank account registered in the Mutual Fund Folio.

What is the process for bank mandate registration and change?

An NRI can register up to five NRE/NRO bank account(s) in the folios for receipt of redemption/dividend proceeds.

Change in existing bank mandate will be allowed from NRE to NRO/SB account and not vice versa.

Can a power of attorney (POA) invest on behalf of the NRI investor?

Yes. A POA has the authority to invest on behalf of an NRI and sign documents for first and additional purchases as well as redemptions. While subscribing for units, the POA holder should submit the original POA or a duly notarised copy of the same. The same will be registered in the folio.

Is nomination by NRIs allowed?

Yes, NRIs may make a nomination and also be nominees in folios of mutual funds.

How can NRIs track their investments?

NRIs are urged to register their email ID while making a purchase. They can get consolidated account statements, portfolio valuation statements and a lot more through online services.

(Contributed by CAMS Viveka, Investor Education Team of CAMS. Views expressed are general practices in the MF industry and may vary on a case-to-case basis.)

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