SIP, or Systematic Investment Plans, is a form of organised financial instrument that helps people invest their money in a regular way into mutual funds. When setting up an SIP with a mutual fund, the invested amount is debited every month and the investments accumulate over a period of time. While SIP is one of the most popular investment instruments for investors in India, non-resident Indians (NRIs), are also allowed to invest in mutual funds. They don't require any prior approval from RBI or any other body before making investments. Let's know about this in detail.
Can NRIs invest in SIPs in India?
Just like any other Indian resident, Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs) are also eligible to invest in various SIP plans in the country. These plans help make mutual fund investments in an affordable way through two options – repatriable and non-repatriable. While mutual fund investments based on a repatriable basis mandate the opening of an NRE or FCNR bank account, investments through a non-repatriable basis require NRO or NRE/FCNR bank accounts.
NRIs must adhere to the Foreign Exchange Management Act (FEMA) to be eligible to invest in SIPs in India.
How NRIs can invest in SIPs in India?
To start investments in SIPs in India, one can follow the given steps:
Begin by setting up your NRE or NRO account.
Note: The Foreign Exchange Management Act (Fema) does not allow investments in foreign currencies for mutual funds, as per Indian laws. Also, it is important for NRIs to have an NRE or NRO account.
– After activating their account, NRIs can invest through the following steps:
a. Self or Direct
b. Through the Power of Attorney (PoA)
- NRIs must also get their KYC process done by submitting a copy of their passport (only relevant pages with name), date of birth, photo, and address.
- NRIs can also redeem their investments through the AMC as it credits the accumulated corpus (investment+gains) after deducting taxes. One can also write a cheque to redeem their investments.
Keeping all these points in mind, NRI investors can opt for SIPs to grow their wealth slowly and steadily.
