Can NRIs invest in Mutual Funds in India?

May 20, 2008 - PRLog -- Non Residential Indians (NRIs) often ask whether they can invest in Mutual Funds in India or not.  The answer is YES!! NRIs can invest in mutual funds in India and these investments can be made on a repatriable or on a non-repatriable basis, as preferred by the investor.

What is 'repatriable' basis?
To invest on a 'repatriable' basis, the NRI must have a Non Resident External (NRE) or FCNR Bank Account in India. The Reserve Bank of India (RBI) has granted a general permission to 'Mutual Funds' to offer mutual fund schemes on repatriation basis, subject to the following conditions:

1)   The Mutual Fund should comply with the terms and conditions stipulated by Securities and Exchange Board of India (SEBI).

2)   The amount representing investment should be received by inward remittance through normal banking channels, or by debit to an NRE / FCNR account of the non-resident investor.

3)   The net amount representing a dividend / interest and maturity proceeds of units may be remitted through normal banking channels or credited to NRE / FCNR account of the investor, as desired by him subject to payment of applicable tax.

What is 'non-repatriable' basis?
The RBI has granted a general permission to 'Mutual Funds' to offer mutual fund schemes on non-repatriation basis, subject to the following conditions:

1)   Funds for investment should be provided by debit to National Reconnaissance Office (NRO) account of the investor. Alternatively, funds may be invested by inward remittance or by debit to NRE / FCNR account.

2)   The current income in the form of dividends is allowed to be repatriated.

It is important and useful to note here that no permission of the RBI either by the Mutual Fund or the investor is necessary.

Does an NRI need any approval from the RBI to invest in mutual fund schemes?
Many NRIs think that they need approval of the RBI to invest in mutual fund schemes in India. This is a myth. A NRI does not require any approval. Only the OCBs and FIIs require approval of the RBI to invest in mutual fund schemes.

Source : http://www.nriinvestindia.com/nri-india-mutual-funds.html

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