A Non-Resident Indian ( NRI )means a person who is an Indian citizen or a person of Indian origin who stays abroad for employment/carrying on business or vocation outside India or stays abroad under circumstances indicating an uncertain duration of stay abroad.
A Person of Indian Origin (PIO) is a foreign national who is of Indian origin e.g. previously held Indian citizenship, or was born in India, or his or her parents were Indian citizens. This is a status therefore associated with citizenship and not residence. A PIO may be living in India or overseas.
Person of Indian Origin (PIO) Cards are issued by Ministry of External Affairs (CPV Division), Government of India to persons of Indian origin through Indian missions abroad. Specific information on rules, forms, particular offices, missions is available on the website http://www.passport.nic.in
FII means an institution established or incorporated outside India, which proposes to make investments in Indian securities and is registered with SEBI.
NRIs / Persons of Indian Origin / FIIs are entitled to invest in Mutual Fund schemes in India.
To invest in Indian Mutual Funds, the NRI has to open any one of the following three kinds of accounts through the banks who provide such facility. They are:
- Non-Resident (External) Rupee (NRE) accounts are Rupee accounts from which funds are freely repatriable. They can be opened with either funds remitted from abroad or local funds transferred from NRE/FCNR accounts, which can be remitted abroad.
- Non-resident Ordinary Rupee (NRO) accounts are Rupee accounts and can be opened with funds either remitted from abroad or generated in India. The amount in such accounts is non-repatriable. However, funds in NRO accounts can be remitted abroad subject to/as per various directives in force at the time of repatriation. More details can be found on the Reserve Bank of India (RBI) website www.rbi.org.in
- Foreign Currency Non-Resident (FCNR) accounts are similar to the NRE account except that the funds are held in permitted foreign currency like USD, GBP, JPY, EUR, CAD and AUD and that it can be opened only in the form of term deposits with a maturity of up to five years.
No special approval is required.NRIs/FIIs have been granted a general permission by RBI [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] for investing in /redeeming units of the schemes subject to conditions set out in the aforesaid regulations. However, PIO’s need to attach a copy of the PIO card with the application form at the time of investing.
An NRI cannot make the investment in foreign currency. He needs to give a Rupee cheque from his NRE/ NRO bank account in India. He may also send a Rupee cheque from abroad payable in a bank in India. However, for an NRI to invest, it is mandatory that he maintains a bank account in India.
The Overseas address is mandatory for NRI Investors. The Local address is optional and can be given as a communication address.
Redemption proceeds will be paid by cheque/direct credit. The cheque will be payable to the first unitholder and will include the bank account number. Alternatively the redemption proceeds will be credited directly to the investor’s bank account. This facility is available with select banks as mentioned in our application forms. Redemption proceeds/repurchase price and/or dividend or income earned (if any) will be payable in Indian Rupees only. The fund will not be liable for any loss due to exchange fluctuations, while converting the Rupee amount into US Dollar or any other currency.
NRI Investors can seek repatriation of the redemption proceeds on their investment where the investment is made through approved banking channels or by debit to their NRE / FCNR Account.
No, Units cannot be redeemed or allotted on the basis of fax applications. A request that lacks a valid signature cannot be processed due to legal restrictions.
Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO accounts cannot be remitted abroad but have to be used only for local payments in rupees. Funds due to the non-resident accountholder which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.
|Type of Account||Currency||Repatriable/Non-Repatriable|
|NRE-Non Resident External||INR||Freely Repatriable|
|NRO-Non Resident External||INR||Non Repatriable|
|FCNR-Foreign Currency Non Resident||USD, GBP, JPY, EUR, CAD and AUD||Repatriable|
The tax treatment for NRI investors with respect to Mutual Fund investments is the same that is applicable for Resident Investors except that applicable tax would be deducted at source for NRIs.
TDS certificate is issued in the name of the investor mentioning the details of the transaction and the tax deducted. The TDS certificate is commonly known as Form16 A.
The digitally signed TDS Certificates (Form 16A) are dispatched to the investors a month after redemption is effected, to the address registered with us.
Yes, if units are held for more than 12 months i.e. on long-term capital gains. However, this is not applicable for equity schemes.
Yes, unlike banks where a POA holder cannot open an account on behalf of the NRI/FIIs, in a mutual fund the POA has the authority to invest on behalf of the investor and sign documents for initial and additional purchases as well as redemptions.
While applying for purchase of units, the POA holder needs to submit the original POA or a duly notarized copy. The Power of attorney should contain the signature of both the first holder and the POA holder. Only when the POA is registered does the POA holder have the right to transact on behalf of the NRI/FII investor. His signature will be verified for processing any transaction/request.
One may visit Reserve Bank of India (RBI) website at http://www.rbi.org.in for further details.