US NRI Can Only Invest in these Mutual Funds

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US NRI Can Only Invest in these Mutual Funds

Living abroad as a Non-Resident Indian (NRI), particularly in the United States, doesn’t have to mean missing out on investment opportunities back home in India. Among the various investment avenues available, Indian mutual funds stand out as an attractive option. However, not all Asset Management Companies (AMCs) permit investments from NRIs based in the U.S., and their policies for dealing with U.S. clients vary. While mutual fund investments are straightforward for NRIs like residents, it’s crucial to note that US-based NRIs face distinct treatment. This differentiation arises due to the compliance obligations imposed by the Foreign Account Tax Compliance Act (FATCA). This blog covers the basic information about FATCA. We also see mutual funds that follow FATCA reporting guidelines and allow U.S. NRIs to invest in mutual funds in India.

Understanding FATCA

FATCA, or the Foreign Account Tax Compliance Act, was introduced by the U.S. Government in 2010 to counter tax evasion by U.S. citizens with overseas financial accounts. Under FATCA, international financial institutions must disclose details of financial accounts held by U.S. taxpayers to the U.S. tax authorities.

For Non-Resident Indians (NRIs), FATCA impacts N.R. accounts, requiring compliance with reporting requirements. NRIs holding NRE or NRO accounts must furnish self-declarations, providing details such as name, PAN, address, and country of residence to ensure adherence to U.S. tax regulations.

While not all NRE/NRO accounts automatically comply with FATCA, NRIS must ensure active compliance. This entails submitting requisite documentation and declarations to their banks and financial institutions, alongside other Indian investments they may hold.

Investing in Indian Mutual Funds as a US-based NRI

While FATCA adds complexity, it doesn’t stop US-based NRIs from investing in Indian mutual funds. However, due to compliance concerns, not all fund houses accommodate investments from US-based NRIs. Fortunately, several reputable fund houses do welcome such investments.

Fund Houses Allowing Investments by U.S. NRIs

Online Transactions (No Physical Presence Required)

  • Aditya Birla Sun Life Mutual Fund
  • Groww Mutual Fund
  • ITI Mutual Fund
  • Nippon India Mutual Fund
  • Quant Mutual Fund
  • Samco Mutual Fund
  • Shriram Mutual Fund
  • Sundaram Mutual Fund
  • UTI Mutual Fund
  • White Oak Capital Mutual Fund

Physical Presence Required

  • 360 One Mutual Fund
  • Axis Mutual Fund
  • Bandhan Mutual Fund
  • DSP Mutual Fund (Lumpsum)
  • Edelweiss Mutual Fund
  • HDFC Mutual Fund
  • ICICI Mutual Fund
  • Kotak Mutual Fund
  • ITI Mutual Fund (Lumpsum)
  • Motilal Oswal Mutual Fund
  • Navi Mutual Fund
  • NJ India Mutual Fund
  • PPFAS Mutual Fund
  • SBI Mutual Fund
  • Taurus Mutual Fund

Can you invest through NRE/NRO/Savings Account? 

NRIs must have a NRO or NRE bank account to invest in Indian mutual funds, as AMCs cannot accept foreign currency investments. All investments by NRIs are made in Indian Rupees.

We insist that US NRIs should use NRE accounts as it’s easy for them to repatriate money back in the future.

One thing to keep in mind is US based NRIs will have to share Foreign Account Tax Compliance Act (FATCA) details and tax identification number (TIN) along with KYC details.

FATCA declaration form captures information like type of address (residence, business, registered office etc.), country of tax residence, tax identification number or SSN and seeks investors consent for sharing the information with relevant tax authorities.

Documents required for KYC of US NRIs

For KYC, here is the list of valid KYC documents:

  • PAN card
  • Overseas address proof ( Driving License or Rental Agreement )
  • Passport
  • Passport size photograph
  • OCI Card (In case of foreign passport holder)

Investing in Indian mutual funds as a US-based NRI offers promising wealth creation and portfolio diversification opportunities. While navigating FATCA compliance and fund house policies may seem complex, NRIs can access various investment options with the proper guidance and due diligence. Always consult with financial experts to make well-informed investment decisions tailored to your financial goals and risk tolerance.

Check out our Youtbe video on this topic:  

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Disclaimer: The information provided here is for educational and informational purposes only and should not be construed as financial, legal, or tax advice. Consult with a qualified professional before making any investment decisions. We do not accept any liability for errors or omissions in this information nor any direct, indirect, or consequential losses arising from its use.

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