Can NRI and OCI invest in mutual funds? - Cafemutual.com (2024)

One of our readers wrote to us with this query:

A few of my NRI (Non-Resident Indian) acquaintances and other few having OCI (Overseas Citizenship of India) status have shown keen interest in participating in India’s growth story by investing in mutual funds.

My current clients are only from India but I am eager to guide my acquaintances. How do I go about it? What are the basic things that they ought to know?

I look forward to receiving your reply.

Thanks in advance.

Regards,

(Reader’s name withheld on request)

Dear Reader,

Thank you for writing to us.

Both NRI and OCI can invest in mutual funds. For the benefit of some of our other readers, allow us to first explain the two terms.

Going by the Income Tax Act, an NRI is an Indian citizen or PIO (Person of Indian Origin) who is not a resident. An individual is deemed to be a resident if he meets the following -

1. Is in India for 182 days or more during the previous year or

2. Is in India for 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.

On the other hand, OCI is a foreign citizen of Indian origin authorized to live and work in India for an indefinite period. Basically, OCI have the nationality of a foreign country with Indian roots/origins.

Coming back to your question, many fund houses usually permit NRI and OCI investments from most geographies.

In this regard, we spoke to Rahul Jain of GR Finvisors of Udaipur who currently has over 125 clients from 23 countries spread across 5 continents.

While investing in mutual funds is largely permitted, the regulations are more stringent in the case of the US and Canada. Also, keeping in mind the socio-political situations, some fund houses have restrictions on NRIs/OCIs from certain geographies like North Korea, Israel, some African regions, etc. Do note that this list varies from fund house to fund house.

In most cases, NRI/OCI investors are required to be physically present in RTA or AMC office. Also, an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account is a must.

Talking about documentation, an India PAN card is compulsory in addition to other documents which usually include Indian and overseas address proof, bank statement, NRE/NRO cheque, FTIN (Foreign Tax Identification Number) for availing the benefits of DTAA (Double Taxation Avoidance Agreements), etc. In certain cases, fund houses also ask investors to submit a declaration stating their presence in India at the time of investing.

Hope we have answered your query. Also, feel free to write to us at [email protected] in case of any specific query on the subject.

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