Mutual Fund Houses that Allow USA/Canada NRIs to Invest in India| North Loop Official Blog
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19 Oct 2020

Mutual Fund Houses that Allow USA/Canada NRIs to Invest in India

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Introduction -

If you are an NRI looking to invest in mutual funds in India, there are some compliance considerations that you must keep in mind. In this article, we will talk about all the rules governing USA/Canada NRI investments and discuss the various Asset Management Companies in India that allow investments in a hassle-free manner.

Who is an NRI?

If you are an Indian citizen and reside outside India for 182 days or more in a financial year, you get termed as a Non-Resident Indian (NRI). Therefore, if you live abroad for employment or to carry out business for more than 182 days or do not fulfil the other criteria as per the Income Tax Act, 1961, you get deemed to be an NRI. The Finance Act, 2020 has also recently added a new section. It states that if your total income (other than foreign sources) does not exceed Rs.15 lakh and you are liable to pay taxes in another country due to residence or employment purpose, you get considered as an NRI.

Get a zero-balance, no-fee NRE/NRO account with North Loop in 5 minutes

Rules for NRI Mutual Fund Investment-

As an NRI, you can invest in a variety of financial instruments in India such as mutual funds, exchange-traded funds (ETFs), stocks etc. However, it is crucial to adhere to the rules laid down by the Foreign Exchange Management Act 1999 (FEMA). Its provisions specify that investments into the capital markets in India are allowed only with the compliance of conditions like filing of KYC documents, opening of a rupee-denominated account (NRE/NRO) etc. By following these rules well, you can easily invest in mutual funds in India.

KYC Procedure for NRIs to Invest in Mutual Funds-

To complete a KYC procedure, you need to complete a few steps -

KYC Form - It is mandatory to attach your KYC form with all the necessary details along with the investment application form to the concerned authorities.

Documents - Certain documents need to be submitted when applying for mutual fund investments in India. These include overseas address proof, recent photograph, copy of passport etc.

Attestation - You can do the attestation of the above documents through authorised officials of overseas branches of scheduled commercial banks registered in India or by a judge, court magistrate, or public notary.

In-Person Verification (IPV) - This is the process of physically meeting the official representatives of the mutual fund house where you intend to invest. For investment in mutual funds for NRIs, IPV is mandatory and can get done through video-conferencing. All you have to do is to upload your documents on the AMC’s website.

Mutual fund for NRIs: Investment Procedure -

Direct/Self Investment - You can invest in the best mutual funds in India directly through your NRE/NRO account. Soft copies of the mutual fund KYC forms are available online on the websites of the AMC. You can even comply with the in-person verification by visiting the Indian embassy in your resident country.

Power of Attorney (POA) - Investment in the best performing mutual funds in India can also get done by appointing a Power of Attorney on your behalf. However, you have to ensure that even the assigned POA is KYC compliant. Moreover, both your signatures should be present on the KYC documents that you submit to the respective mutual fund company.

Mutual funds for US NRIs/Mutual funds for Canadian NRIs -

The list of the best mutual funds in India that accept investments from NRIs based in the USA and Canada are as follows -

   
Fund   
   
1 YR Return (%)   
   
3 YR Return (%)   
   
5 YR Return (%)   
   
UTI Healthcare Fund   
   
67.7   
   
15.3   
   
5.1   
   
L&T Triple Ace Bond Fund   
   
13.2   
   
9.6   
   
8.4   
   
UTI Equity Fund   
   
14.7   
   
8.6   
   
9.4   
   
UTI Gilt Fund   
   
9.6   
   
8.3   
   
9.1   
   
Sundaram Corporate Bond Fund   
   
11.4   
   
8.3   
   
8.6   
   
L&T Banking & PSU Debt Fund   
   
10.7   
   
8.3   
   
8.3   
   
L&T Flexi Bond Fund   
   
10.4   
   
8.3   
   
8.4   
   
L&T Short Term Bond Fund   
   
9.7   
   
8.1   
   
7.9   
   
Sundaram Banking & PSU Debt Fund   
   
8.5   
   
7.6   
   
7.7   
   
L&T Gilt Fund   
   
10.5   
   
7.6   
   
8   

FATCA guidelines for US and Canadian NRI investors -

Investment in mutual funds for US NRIs or Canadian NRIs requires a couple of special compliance procedures. Under FATCA or the Foreign Account Tax Compliance Act, all financial institutions must share details of all transactions involving US citizens or NRIs with the US government. The principal reason behind the FATCA guidelines is the need to ensure that there is no deliberate tax evasion on the income generated by US citizens overseas. To improve International Tax Compliance and implement FATCA, India has also signed an Inter-Governmental Agreement (IGA) with the USA. That is the reason it has become mandatory for mutual fund houses to meet all compliance requirements.

Conclusion -

You can invest in the best performing mutual funds in India by following all the steps carefully. It is even easier to apply for mutual fund investments if you choose an online investment platform like North Loop. The documentation required is lesser, the process is faster, and the entire investment can get done seamlessly. Using North Loop’s app, you can also track and access your portfolio with just a few clicks.

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.