Monday, October 22, 2007

Investing in Indian Mutual Funds for NRIs

NRI's(No Resident Indians) are enamored by all the business media reports about the economic boom in India. They wonder how to invest in India but there are no step by step details on the procedures to invest in Indian Mutual funds. This is an attempt to help NRIs invest in Indian mutual funds।


  1. Do you have a PAN Number ? PAN number is the Indian Governments attempt to have an individual identification number for each Indian much like the Social Security Number in the US. The PAN Number is the "PERMANENT ACCOUNT NUMBER". As of July 2007, it is mandatory for all Indians (residents and NRIs) to, at least, apply for the a PAN number before making an investment in Mutual Funds and Stocks. Further details are available at http://incometaxindia.gov.in/PAN/Overview.asp
  2. Tax Advantages: An investor investing in India must keep in mind the potential risks of investing in India. Remember Harshad Mehta? Ketan Parikh ? and, of course, the dot come bust in the year 2000. However, if you believe in the India Growth story or for that matter, any of the BRIC nations, one as an NRI, must invest in India because of the tax benefits. It is true that a number of ETFs and Funds can be purchased in the US to enable one to gain exposure to the Indian market but as an Indian you have special privileges that you may not be aware of. Indians can invest in the Indian Stock market directly or via Mutual funds and are not subject to long term capital gains tax. The Short Term Tax Rate is as low as 10%.
  3. Double Advantage- As Indian stocks appreciate in value a rupee transferred a couple of years ago has itself appreciated by almost 10%. So stock market returns are compounded by the weakening of the dollar.
  4. NRE Account / NRO Account: These are Non Resident Accounts that can be opened by an Indian, when the Indian has been away from India for a stipulated time. An NRE account, is an account where the money resides in rupees but the source of funds has to be external remittances only . This account allows complete repatriate of the investment proceeds provided the source of funds are from abroad. Investments can also be made from NRO accounts but NRO Accounts should be used for money that one does not intend to reparitate. Higher interest rates are offerred on NRO accounts. These accounts can be opened up with ICICI bank, HDFC Bank ,Citibank etc.
  5. Sign up for Money Transfer Service. A number of money transfer services are available online that link your checking account in the US to your NRE/NRO accounts in India. Once all set up it is as convenient as clicking a button to transfer the funds to India.
  6. Knowing your risk profile - There are plenty of options available to invest within mutual funds. Each individual must assess his /her own risk profile. At a high level there are equity funds, balanced funds and debt funds. Some companies now offer a number of variations like a "Dynamic" fund that gives the fund manager the flexibility to invest in Debt or Equity with no minimum holding requirements .A number of companies allow total Internet access to its investors like www.pruicici.com, www.hdfcfund.com and www.reliancemutual.com
  7. Researching the funds - Funds can be researched at www.moneycontrol.com. In my experience, the website provides comprehensive fund detail and analysis to help make a decision.
  8. Actually Investing. To my knowledge, the best way to do this is to download a pdf form from the mutual fund website , fill it up , provide the NRE/NRO bank account details and mail a cheque in to the various mutual fund service centers. Providing an email will help that you receive account statements by email.

Happy Investing !

4 comments:

Anonymous said...

I cam across this link on your website..

http://nriinvestindia.com/nri-apply-pan-card-online.html

Have you or anybody used this? Any comments?

Aaradhna said...

Non-Resident (External) Rupee (NRE). This is a Rupee account from which funds are freely repatriable. It can be opened with funds remitted from abroad.

Non-Resident Ordinary Rupee (NRO). This is a Rupee account and can be opened with funds generated in India. These funds are non-repatriable.

To know on NRIs investment in Indian Mutual Funds, view - http://www.sundarambnpparibas.in/nrifaqs/nrifaqs.htm

Profitshastra said...

NRI investors can invest in the Indian market with ease. Following webpage has all the necessary information:
http://www.profitshastra.com/services.html

Anonymous said...

Keep posting stuff like this i really like it