Mutual funds have become one of the most popular avenues of investment in India, and nowadays, everyone from seasoned investors to new beginners wants a piece of the pie. Anyone in India can invest in mutual funds as long as their KYC documents are in order. But what about NRIs? When Indian citizens plan to travel abroad for job opportunities, they often wonder whether they’d be able to invest in mutual funds once they achieve NRI status.
The answer is yes. Even after you become an NRI when you’re a seafarer, you can invest in mutual funds in India as long as you follow all the rules and regulations mentioned in the Foreign Exchange Management Act (FEMA).
Let us find out how you can start investing in mutual funds as an NRI.
How to Invest in Mutual Funds as an NRI
Step 1: Open an NRI Account
The FEMA law dictates that once you become an NRI, you cannot hold regular savings account in India. But the Mutual Fund AMCs do not allow anyone to invest in mutual funds using foreign currency. So what can an NRI do? It’s simple, simply open an NRI account. An NRI account can be an NRO or an NRE account. If you’re in the merchant navy, you can open a seafarer account that is designed for your unique needs.
Once you have an NRE or NRO account open, you can use it to make deposits from your foreign income or income from Indian sources. Both of these accounts are maintained in INR, and thus you can invest in mutual funds using these accounts.
You can invest in it in two ways:
- A) Invest yourself
You can invest in mutual funds yourself through the usual banking channels. You’re required to furnish KYC documents like passport copy, PAN, ID and address proofs etc. An in-person verification may also be requested, which you can do at the Indian embassy.
- B) Invest Via Power of Attorney
Another option of investing as an NRI is allowing another person to invest on your behalf. Mutual fund houses in India allow people with the power of attorney to invest and take decisions regarding the investment on your behalf.
Step 2: Get Your KYC Done
When you want to invest as an NRI, you must complete the KYC process by submitting all the relevant documents to the mutual fund company. Commonly, residential proof, passport copies, and other such documents are required. Some mutual fund houses may also request in-person verification.
Step 3: Redeeming Investment
When you decide to redeem your investment, you can do so by following the redemption procedure as instructed by your AMC. Different fund houses may have different procedures for redemption. Once you redeem, the fund house will deposit your investment along with the gains after deducting taxes in your NRE or NRO account.
If you’re an NRI and want to invest in mutual funds in India, you can definitely do so via an NRE or NRO account. For seafarers, the ICICI seafarer account could be an excellent way to begin their investment journey. Once you’re on your way into investing in India, the future is bright since you can invest, keeping in mind your retirement goals or future expenses.