Many NRI investors based in the USA and Canada are willing to invest in Indian mutual funds. A US or Canada citizen with NRE and NRO accounts can invest in mutual funds and other financial products such as NRI fixed deposits, stocks, bonds, government securities, real estate, and more, subject to prescribed regulations.
NRIs are allowed to invest in mutual funds in India on a repatriable or non-repatriable basis subject to regulations prescribed under the Foreign Exchange Management Act (FEMA). For general NRIs (not from USA and Canada) the process of investing in Indian mutual funds is as simple as it is for the Indian investors. They just need to comply with certain norms set by the country they are based in.
USA and Canada based NRIs would be able to invest in only some of the Mutual Fund Houses in India. Most of the AMCs in India do not allow investments from NRIs based in the USA or Canada. This is because the Foreign Account Tax Compliance Act (FATCA) enacted by the USA. Since the times FATCA has come into place, many AMCs have stopped accepting investments from NRIs based in the US and Canada as it involved a lot of paperwork and compliance on the part of AMCs. Foreign Account Tax Compliance Act is obligatory for all financial institutions to share the details of transactions involving US citizens, including Non-Resident Indians (NRIs) with the US Government.
Under FATCA, all the financial entities like mutual fund houses, Insurance companies, banks are supposed to furnish their client information to the Government of India that will further be shared with the US/Canadian Government.
Only a few AMCs are accepting investment from the NRIs based in the USA and Canada. Each of the AMC has a different condition to accept investments from US or Canada based NRIs. Some of the fund houses accept investments only in paper application forms, whereas a few may accept online application also.
“Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing”.