How Can NRI invest in Mutual Funds in
India - 2025

NRIs can invest in mutual funds which are among the most well-liked financial options. However, before investing, one must refer to the mutual fund scheme's scheme information document (SID) to find out more about the details.

Let's understand how NRIs can invest in mutual funds and additional important information about investment of NRIs in mutual funds.

Can NRI invest in Mutual Fund in India ?  Here's How

Definitely, if the person follows the guidelines specified under Foreign Exchange Management Act (FEMA), then NRI can invest in mutual funds in India.

• A person who resides outside of India but is an Indian citizen is referred to as a Non-Resident Indian (NRI) under Regulation 2 of FEMA Notification No.13, issued May 3, 2000.
• A person who has been in India for 120 days or more in a fiscal year, or 365 days or more in the four fiscal years prior, and for at least 60 days in that year, is considered a resident under the Income-tax Act of 1961.  As a result, anyone who travelled to India for fewer than 120 days during a fiscal year are considered NRIs.
• The current fiscal year saw the introduction of this amendment. The 120-day threshold used to be 182 days. There is a catch, though. The 120-day rule will only be applicable if the total Indian income that is, income earned in India during the fiscal year exceeds Rs 15 lakh. Only if their stay does not exceed 181 days, as was previously the case, will visiting NRIs whose total taxable income in India during the fiscal year is up to Rs 15 lakh remain NRIs.
• Where an NRI can invest is determined by the FEMA definition of an NRI, and how these investments would be taxed is determined by the Income Tax Act definition of an NRI.

The Procedure for NRIs to Invest in Mutual Funds:

NRIs can invest in Indian mutual funds by following specific legal and banking procedures. Understanding the right steps ensures smooth and compliant investment from abroad.

1st Step: Setting Up an Account

As per the rules, Management Companies (AMC) in India cannot accept investments in foreign currency.

After obtaining NRI status, you are not permitted by Indian law, more especially the Foreign Exchange Management Act (FEMA), to keep your funds in an ordinary resident savings account in India. This law requires that an NRI understand the distinctions between an NRE and an NRO account and determine which one best fits their needs.

• NRE Account: An NRE account is ideal for people who wish to transfer their foreign-earned money to India. 
• NRO Account: Funds held in NRO accounts must also be in Indian rupees, and they are difficult to repatriate in other currencies. NRIs can deposit their profits in India via NRO accounts. The distinction between NRE and NRO accounts is significant.

After activating the account, an NRI can invest in mutual fund by any of the below methods.

     A. Self or Direct

• NRI's application comprising the necessary KYC information must specify whether the investment is repatriable or non-repatriable. 

• NRI may conduct transactions, debiting or crediting through standard banking channels.
• A recent photo, certified copies of a Pan Card, a copy of a passport, proof of residency outside of India, and a bank statement are all part of the KYC paperwork. An NRI can visit the Indian Embassy in their home country to complete any in-person verification that the bank may require.

     B. Through the Power of Attorney (POA)

The other common method for NRIs to invest in Mutual Fund is to have someone else invest on behalf of an NRI.

Mutual fund companies in India let their holders make decisions about their investments and make investments on their behalf.  To make these kinds of investments, however, the KYC paperwork must bear the signatures of the NRI investor and the POA.

2nd Step: Get Your KYC done

Completing the KYC procedure is a must for the before starting investment in Indian mutual funds.

KYC consists of submission of documents such as copy of the passport (only relevant pages with name, date of birth, address proof, photo) are required. In addition, current residential proof, too, is a mandatory, whether temporary or permanent resident in that country. Some mutual fund houses may also insist on verification in-person.

Due to the stringent compliance requirements imposed by the FATCA (Foreign Account Tax Compliance Act), several mutual fund institutions in India do not permit non-resident Indians (NRIs) from the United States and Canada to invest in their schemes.  On the other hand, certain fund houses place restrictions on the amount of money that investors from the United States and Canada can invest in their schemes.

However, please remember that NRI from the USA or Canada have to comply additional document requirement.

For Example, few Mutual Funds allow investments through an offline transaction only with an additional declaration signed by the investor.

List of a few fund houses that accept investments from NRIs based in the US and Canada:

• Aditya Birla Sun Life Mutual Fund
• L&T Mutual Fund
• SBI Mutual Fund
• UTI Mutual Fund
• ICICI Prudential Mutual Fund
• DHFL Pramerica Mutual Fund
• Sundaram Mutual Fund
• PPFAS Mutual Fund

3rd Step: How to Redeem?

NRIs can redeem their mutual fund investments by following the redemption process that the fund houses specify.  In India, different fund institutions have distinct policies regarding NRI redemption.

 After taxes are subtracted, the AMC will credit the corpus (investment plus profits) you get upon fund redemption to your account and credit the investor's corresponding NRE or NRO bank account.  For the same, they can also write a check.

Important Points to be Noted for NRIs to invest in mutual fund:

• The application will be refused if information about a foreign bank account is submitted.
• The tax will be subtracted at the source of the investment's capital gains upon the redemption of mutual fund units.
• As long as you are an NRI, you can repatriate the money you have invested and earned from mutual fund schemes.
• You need to verify whether you live in one of the 90 nations that have ratified the Common Reporting Standard (CRS).  CRS is an international reporting system designed to stop tax evasion worldwide.

Conclusion

Although there may be some initial difficulties, NRIs can invest in  mutual fund market with ease.  The return on investment would be worthwhile in the long run, though, and there is no reason why you shouldn't invest in one of the world's fastest-growing economies.