A Know How On NRI Mutual Funds

Mutual funds are a much sought after investment option these days. The Indian mutual fund industry is not as developed as the European and western nations.

It has nonetheless grown in leaps and bounds. The NRIs investing in India also want to partake of this growth.

  • NRIs are eligible for two kinds of investment in India – Repatriable and other is Non-Repatriable. In order for one to make investments on repatriable option, a FCNR or NRE bank account is a must.


  • NRIs need to have Non- Resident External Account or NRE account. And the funds in it are eligible for 100% repatriation. Non Resident Ordinary account or NRO is only partially repatriable. FCNR is foreign currency anon resident account. This account has minimal surface risk. In these types of accounts


  • The repatriation is possible if the bank is satisfied that as per RBI guidelines, the net proceeds, dividend and interest are transferred through normal banking channels or FCNR or NRE account and should be adjusted for tax where applicable. Further, the principal investment should also occur through a FCNR or NRE account. Further, the SEBI terms must also be complied with.


  • Non-Repatriable option is sans SEBI restrictions and is the same as the Repatriable option except it also allows investment via a debit to an NRO account.


  • Non resident Indians like mutual funds since they get to taste the returns of shares and other like instruments.

  • Popular surveys show that almost 6% of the assets of Mutual Funds belong to NRIs.


  • When selecting a fund an investor must be careful that it matches the criteria. It must be determined as to when the money invested will be required. Whether it will be needed for a short term of 3-5 years or a long term beyond that.


  • NRIs often opt for mutual funds because a team of professionals manage their investments. It is also so since mutual funds provides better returns. It also provides better diversification.


  • NRIs can participate in all kinds of mutual funds and for advantage in tax. Dividends by them are tax free.


  • If as an NRI the idea is to go short term, then debt funds are better. For Mid-term-Hybrid funds and finals it will be equity funds.


  • NRIs should be clear with the amount of taxes they will have to bear and tds if any.

India today allows non residents to invest in a regulated manner in mutual funds. Further, US investors and fund houses will be finding it quite a challenge.

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