Mutual funds offer an easy and relatively cost-effective way to invest without the hassle of managing individual stocks. And, for NRIs, mutual funds offer a structured avenue to start investing in Indian capital markets and have their investments managed by professionals.
The assets under management (AUM) of the Indian mutual fund industry have witnessed remarkable growth – this is a reflection of increasing investor confidence. As of end-February, the total AUM stood at ₹64.53 lakh crore, which is more than a two-fold increase over the past five years. This makes mutual funds a preferred investment avenue for both domestic and international investors seeking to capitalise on India’s growth narrative.
A mutual fund pools money from many investors and uses it to purchase a diversified portfolio of stocks, bonds or other securities, so each of the investors can benefit from shared costs and professional expertise as the investments are managed by a professional fund manager who is an expert in this field.
For NRIs, for whom hands-on management of stocks may not be possible, this offers a good option. Some of the advantages include potential for capital appreciation, portfolio diversification and access to diverse product offerings, professional help and the potential for rupee appreciation.
Before you start your mutual fund investment journey, you need to complete certain regulatory requirements to be able to start. Read on to know more.
Step 1: Complete the KYC process
Before investing, NRIs must complete the Know Your Customer (KYC) process, as mandated by the Securities and Exchange Board of India (Sebi). KYC verification is a mandatory for all new investors.
As of now, all asset management companies or AMCs offer only offline KYC, which means the KYC process requires NRIs to be physically present in India for verification. However, SEBI is working on making this process smoother through digital apps with video verification and geo-location tagging.
Step 2: Choose your bank account
Next, you need an Indian bank account. NRIs can invest through either a Non-Resident External (NRE), or Non-Resident Ordinary (NRO) account. The selection between an NRE and an NRO account should be predicated on the source of the investment funds and the investor’s long-term financial objectives. A thorough understanding of the distinct features and implications of each account type is crucial.
Step 3: Select a platform to start investing
Once your KYC process has been completed and your bank account is set up, you can start investing through various platforms. These include: Asset management company (AMC) websites and apps; registrar platforms (myCAMS, Kfintech); MF Central; MF Utility; BSE STAR MF of BSE; MFSS facility of NSE; NMF-II platform of NSE; EOPs.
These platforms make it easy to track and manage your investments from anywhere in the world.
Step 4: Keep your KYC validated
Currently, NRIs can invest with a ‘KYC Registered’ status until April 2025 after that, all investors must upgrade to ‘KYC Validated’ by providing an Aadhaar-based address proof.
(By arrangement with livemint.com)
