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Can NRIs Invest In Mutual Funds In India?

Published On Oct 14, 2021 8:02 PM By InsuranceDekho

The Indian stock market provides an excellent chance for NRIs to reinvest their money in India. Although NRIs with the necessary experience can invest directly in stocks, mutual funds are a sensible and cost-effective option for all sorts of investors. We will look at how NRIs can invest in mutual funds in India, as well as the process and rules.

Can NRIs Invest In Mutual Funds In India?

Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) can invest in Indian stocks and mutual funds if they follow the Foreign Exchange Management Act's restrictions (FEMA). However, due to the time-consuming procedures required by the Foreign Account Tax Compliance Act (FATCA), several mutual fund institutions refuse to accept mutual fund applications from NRIs living in the United States and Canada.

How Can NRIs Invest In A Mutual Fund In India?

NRIs can invest in Indian mutual funds in a direct manner, and the RBI has attempted to make the onboarding process for NRIs as simple as it is for a local Indian. The details of the Indian bank account must also be given in detail in the application form when submitting the application after completing the KYC. The mutual fund does not take foreign currency checks, and all checks and draughts must be made payable to the fund in Indian rupees. If an NRI wishes to transfer cash using a dollar cheque, they must contact their Authorized Dealer (bank) to obtain rupee drafts in exchange for the dollar cheque. The NRI has the option of investing directly in mutual funds or investing through a power of attorney (POA). When it comes to investing in Indian mutual funds, there is something special that NRIs should be aware of. If the NRI's capital gains or dividends are taxable, the fund will subtract the TDS and only pay the NRI the net amount. This is where the tax treatment of non-resident Indians differs from that of resident Indians.

How Can NRIs Withdraw Money From Mutual Funds?

When NRIs redeem mutual funds, they can do so directly or through a power of attorney (POA). When the fund is redeemed, the same capital gains laws will apply as they do for resident Indians. The amount of your redemption credit will be determined by whether your investment was repatriable or non-repatriable. If you invested from an NRO account, for example, the redemption will only be credited to that account. The redemption funds will be credited to the same account if you invested by debit to your FCNR or NRE account. You can, however, choose to have your NRI / FCNR investments redeemed into your NRO account.  


NRIs can readily invest in India's mutual fund sector, albeit the process may be complicated at first. However, the return on investment would be worthwhile in the long run, and there is no reason for you to miss out on investing in one of the world's fastest-growing economies.

Also read - Is It Safe To Purchase A Term Insurance Plan Online?

Why Should NRIs Consider Purchasing Term Insurance In India?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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