India Calling: How should NRIs approach investing in Indian mutual funds?

livemint.com:

mutual funds, fixed deposits, and debt funds, offers a promising avenue for wealth creation. This article explores the specifics of mutual fund (MF) investments in India for NRIs, highlighting the regulatory framework and the necessary steps to make informed decisions. For NRIs eyeing the Indian mutual fund market, the initial step involves setting up either a Non-Resident Ordinary (NRO) or a Non-Resident External (NRE) bank account with an Indian bank.

This requirement stems from the regulation that Asset Management Companies (AMCs) in India cannot accept foreign currency investments. Hence, all investments by NRIs are made in Indian Rupees. NRIs can approach mutual fund investments in India through two primary methods: 1. Direct Investment: This approach involves the NRI submitting their application and the required Know Your Customer (KYC) documents.

This process may necessitate in-person verification, for which the NRI should visit the Indian embassy in their country of residence with the relevant documentation. 2. Power of Attorney (PoA): Alternatively, NRIs can assign a PoA to a trusted individual in India to make investment decisions on their behalf.

This method requires the signatures of both the NRI and the PoA on all KYC documents. To ensure a smooth investment process, NRIs must adhere to various regulatory requirements and submit specific documentation: KYC Compliance: Essential documents for KYC include a passport copy, PAN card, recent photograph, bank statement, and proof of address. FEMA Regulations: Investments must comply with the Foreign Exchange Management Act (FEMA), necessitating a declaration from NRIs to affirm adherence to Indian regulations.