NRI Centre - Knowledge Centre - Religare Mutual Fund

Who is a Non-Resident Indian (NRI)?

The following are the main three categories of NRIs:-

An Indian citizen who stays abroad for employment or for carrying on business or vocation or under circumstances indicating an indefinite duration of stay abroad.
Indian citizens working abroad on assignments with foreign governments or international agencies like UNO (United Nations Organization), International Monetary Fund (IMF), World Bank etc.
Officials of Central and State Government and Public Sector Undertakings deputed on foreign assignments abroad.

Who is a Person of Indian Origin (PIO)?

A Person of Indian Origin means a citizen of any country other than Bangladesh or Pakistan, if:-

He at any time held an Indian passport or
He or either of his parents or grand parents was a citizen of India or
The person is a spouse of an Indian citizen or person referred to in a. or b. above

Can a NRI / PIO invest in mutual fund schemes in India?

Yes.

Can a NRI / PIO maintain a bank account in India?

Yes. NRIs / PIOs can maintain accounts in Indian rupees as well as in foreign currency.

Can NRIs / PIOs invest foreign currency in mutual fund schemes in India?

No. Only Indian rupees can be invested in mutual fund schemes in India.

In that case, what are the different types of rupee accounts that NRIs / PIOs need to maintain for investing in mutual fund schemes in India?

The types of rupee accounts that can be maintained by NRIs / PIOs for investing in mutual fund schemes in India are as follows:

NRE: Non-Resident (External) Rupee Account
NRO: Non-Resident (Ordinary) Rupee Account

What is the distinction between NRE and NRO Accounts?

Funds held in NRE accounts can be repatriated abroad freely. They can also be used for local payments in rupees.
Funds held in NRO accounts generally cannot be repatriated abroad. They can be used for local payments in rupees.

Can NRIs / PIOs furnish a mutual fund application form with overseas bank account details?

No. Either NRE or NRO account details have to be provided.

Do NRIs / PIOs require any approval from the RBI to invest in mutual fund schemes?

No special approval is required.

What is the mode of payment for buying units of an Indian mutual fund scheme?

Payments for the purchase of units may be made by cheques drawn on the NRE, NRO or FCNR (Foreign Currency Non-Repatriable) account of the investor, payable at the city where the scheme application form is accepted by a mutual fund Investor Service Centre. Payment can be also made through Indian Rupee drafts purchased abroad.

How will the redemption proceeds be paid?

Redemption proceeds will be paid by cheque. 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 and is usually mentioned in the scheme application forms.

Redemption proceeds/repurchase price and/or dividend or income earned (if any) will be payable in Indian Rupees only.

How can the redemption proceeds be repatriated?

Where the investment is made out of inward remittance or from funds held in the NRE account of the investor, the maturity proceeds/repurchase price of units (after payment of taxes) will be credited to the specified NRE account.

The same can be remitted abroad freely by the investor.

What about redemption proceeds from investments made on a non-repatriable basis?

Where the purchase of units is made on a non-repatriable basis, the maturity proceeds / repurchase price of units (after payment of taxes) will be credited to the specified NRO account of the investor.

Are redemption proceeds transferred to a NRI's / PIO's overseas account?

No. Redemption proceeds will be transferred to a specified NRE / NRO account only.

Can NRIs / PIOs avail of the indexation benefit?

Yes. Indexation benefit is applicable on units held for more than 12 months.

Can a Power of Attorney (POA) holder invest on behalf of the NRI investor?

Yes. The POA holder has the authority to invest on behalf of the NRI investor and sign documents for initial and additional purchases as well as redemptions.

However, POA holder must submit the original POA or copy, duly notarized along with first time purchase.

Is nomination by NRIs / PIOs allowed?

Yes.

Do NRIs / PIOs have to confirm to 'Know Your Client' (KYC) guidelines?

Yes. For details on the same please click here.