Many Indians move overseas in the pursuit of job opportunities. They usually do so to support their family back in India financially. In such cases, having some financial backing comes in handy. Precisely why most NRIs invest in Mutual Fund in India. It expands their income earnings significantly. This way, they get to support their family better. Here is how it gets done:
Regulations
Non-resident Indians can make Mutual Fund Investment in India. However, they must abide by the rules of the Foreign Exchange Management Act. Once they do so, they can proceed with their application.
Account
An NRI must have a Savings Account to transact money in India. The same applies to investing in Mutual Funds. Global Indians cannot start their investment journey with an International Account. They should own either of the three types:
- A Non-Resident External Account
- A Non-Resident Ordinary Account
- Foreign Currency Non-Resident Account
Method
After the NRI has fulfilled the requirements, they may opt for one of the following methods:
- Self/Direct
Here, the NRI needs to look for a fund house. Then, they must fill out the Mutual Fund Application. It indicates if the investment is on a repatriable or non-repatriable basis. Once done, the fund house asks for in-person verification. They need to visit an Indian Embassy in their resident country for this. You can do all this physically or through an online Mutual Fund platform.
- Power of Attorney
Here, the NRI may have someone else invest on their behalf. This individual is the Power of Attorney (PoA) holder. They can be anyone selected by the NRI. However, they must be an Indian citizen. This method requires the signatures of both the NRI investor and the PoA. The latter may transfer the funds through investments over foreign remittance. You could also let it accumulate in the NRI Account.
KYC
Like Indian residents, NRIs should adhere to the KYC, too. For this, they need to submit the following documents:
- A copy of their passport (pages mentioning their name, age, and DOB)
- Residential proof (outside India)
- PAN Card
- Latest passport-sized photographs
- Bank statement
Redemption
An NRI can redeem their Mutual Fund units as and when they want. But it gets credited to their Bank Account only after deducting applicable taxes. Some fund houses let the redeemed funds get credited directly in the NRO/NRE Account. However, if it is a non-repatriable investment, it only gets credited to an NRO Account.