In today’s time when we tend to move out of India for job opportunities but invest some amounts in our own country we need to know various regulations which govern our investments. The major requirements by RBI on NRI investments in India are discussed below in this article:

REQUIREMENTS FOR NRI’S:

  • Submission of passport copy is mandatory. Relevant pages of passport having name, photo, date of birth and address should be submitted.
  • Overseas address is mandatory. Either the permanent or correspondence address must be an overseas address.
  • Either of NRE/NRO/FCNR Account should be maintained.
  • If the investment is made through cheques or drafts, the investor should attach with the application form a foreign inward remittance certificate (FIRC) or a letter issued by the bank confirming the source of funds. FIRC is a proof of payment received by the individual from outside the country in a foreign currency. It is issued by the bank where you have the account to receive the funds.

DETAILS OF PROCEDURE:

RBI Master circular: All investments made by NRIs have to be in local currency, that is, the rupee. Mutual funds in India are not allowed to accept investments in foreign currency.

For investing in Indian mutual funds, therefore, an NRI needs to open one of the three bank accounts-

  • Non-resident external rupee (NRE) account: An NRE account is a rupee account from which money can be sent back to the country of your residence. The account can be opened with money from abroad or local funds.
  • Non-resident ordinary rupee (NRO) account: An NRO account is a non-repatriable rupee account, hencenot advisable as the amount can’t be transferred back. In case of investments through NRO account only capital appreciation is repatriable not the principal amount.
  • Foreign currency non-resident account (FCNR): with an Indian bank. An FCNR account is similar to the NRE account, except for the fact that the funds are held in a foreign currency.The amount that is to be invested can be directly debited from an NRE/NRO account or received by inward remittances through normal banking channels. An NRI needs to give a rupee cheque or draft from his NRE/NRO account. He can also send a rupee cheque/draft issued by an exchange house abroad drawn on its correspondent bank in India.
    Mutual funds allow a power of attorney (PoA) holder to take these decisions on your behalf. All that the PoA holder needs to do is to submit the original PoA or an attested copy of it to the fund house. The PoA should have signatures of both the NRI and the PoA holder. The PoAholders signature will be verified for processing any transaction.Similarly, an NRI can make a resident Indian his/her nominee in the mutual fund scheme. An NRI can also be the nominee for investments made by a local resident. Fund houses also allow an NRI to have a joint holding with a resident Indian or another NRI in a scheme.

The above data is according to regulations prevailing at the time of drafting of article.

Happy Investments !!

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