Everyone wants in on the Indian growth story, that's for certain. In just the last 5 years, the Assets Under Management (AUM) of the Indian Mutual Fund industry has more than tripled, reaching ~₹70 lakh crore as on April 30, 2025. But unlike a resident Indian, if you are an NRI looking to invest back home, you might have found yourself in a web of questions. Here we’ll delve into everything you need to know about investing in mutual funds in India.
Why mutual funds are a great option for NRIs
- Mutual funds don’t require you to track the Indian stock market in real time. Stock trading is tied to Indian Standard Time, which may not align with your local time zone. However, mutual funds, especially Systematic Investment Plans (SIPs), allow you to automate periodic investments without the need for active management.
- Mutual funds are a better option because they offer diversification across asset classes, sectors, and companies. Investors also get the benefit from professional fund management, lower investment ticket sizes, and relatively low fees. In short, mutual funds are a great way to build long-term wealth in a structured, efficient way without needing to become an expert yourself.
Process to invest in mutual funds as an NRI
Step 1: Set up an NRE/NRO bank account
The most important requirement for NRIs for investing in India is having the right bank account. NRIs need to ensure that they have either an NRE (Non-Resident External) account or an NRO (Non-Resident Ordinary) account to invest in India. If you had a regular savings account before becoming an NRI, you need to convert this account to an NRO account.
An NRE account needs to be opened afresh and is suited for funds you remit from overseas, as it permits repatriation of both principal and gains. An NRO account, on the other hand, is for income earned in India. This includes income like rent from a property in India or a pension. Repatriation of funds from this account is capped at $1 million per financial year (with applicable taxes and documentation). It is important to choose the account that aligns best with your investment strategy and future repatriation needs. Most NRIs have both types of accounts, which they use for investments based on the source of money (whether Indian or foreign) that they are looking to invest.
Step 2: Complete the KYC process
After this, you are required to complete the Know Your Customer (KYC) process for investments. This is a regulatory requirement set by SEBI for all new investors, including NRIs. If you were holding any mutual fund investments prior to becoming an NRI, you need to redo your KYC as an NRI through your AMC or a distributor. At present, mutual fund companies offer only offline KYC for NRIs, which means you need to either be physically present in India or send notarised documents from abroad to complete the steps.
To complete your KYC, you’ll need to submit the following documents:
- Passport
- PAN card
- Overseas address proof (which can be a utility bill, bank statement or driver’s license in English)
- Customer photo
- Cancelled cheque or bank statement from your NRE/NRO account,
- FATCA declaration form (especially if you are based in the US or Canada)
- Apart from the given list, US and Canada-based investors may also need to furnish additional documents as per FATCA requirements.
Step 3: Validating your KYC
Starting 2024, your KYC can have one of the following 3 statuses:
- KYC Validated - This means your KYC details have been successfully verified with Aadhaar details. If your KYC status is Validated, you can invest, switch AMCs, or open new folios without submitting KYC documents again.
- KYC Registered - This means your KYC is accepted but not digitally validated. This is the status when you have used a passport or some other document as proof of identity in your KYC, and not a digitally verifiable ID like Aadhaar. You can continue investing with existing AMCs, but to invest with a new AMC, you’ll need to re-do your KYC by resubmitting your KYC documents.
- KYC On-Hold - This status indicates a problem. Either missing email or mobile, unverified or inadequate documents. In this case, your transactions may be blocked until you update or fix the issues by submitting corrected documents.
You can check your current KYC status on any of the five KYC Registration Agency (KRA) websites: CAMSKRA, CVLKRA, Karvy KRA, NDML KRA, or NSEKRA. If your KYC status is ‘Validated’, you’re good to go. If your KYC status is ‘On-hold’, you are required to redo your KYC, and if your status is ‘Registered’, you need to authenticate your Aadhaar to get the ‘Validated’ status. Once you have an Aadhaar linked to an Indian number, you can authenticate your Aadhaar directly on the same KRA website where you checked your status.
SEBI has allowed NRIs an extension till 30th April 2026 to continue investing with a ‘Registered’ status. However, post this extension, NRIs with ‘Registered’ status will have to re-submit KYC documents every time they want to invest with a new AMC.
Step 4: Choose where to invest from
If you already have mutual fund investments in India and have now become an NRI, you must update your new residential status, bank account details, and contact information with all your existing folios. This ensures that all your future transactions go through smoothly and is FEMA compliant.
However, if you are new to this landscape, you have a few ways to start your mutual fund journey:
- You can invest directly through the websites and apps of Asset Management Companies (AMCs) like HDFC Mutual Fund, ICICI Prudential, Invesco, etc.
- If you want to manage multiple investments in one place, you can use platforms like myCAMS or KFintech. These, however, show only the fund houses they’re linked to. For a more complete view across fund houses, MF Central and MF Utility are helpful ‘all-in-one’ platforms. There are also options through the stock exchanges, like BSE STAR MF or NSE’s NMF-II.
- Lastly, there are popular apps like Groww, Zerodha Coin, Kuvera, and Paytm Money that make investing simple.
Why do American and Canadian NRIs find it harder to invest in Indian mutual funds?
For NRIs based in the US and Canada, investing in Indian mutual funds comes with a few extra hurdles. This is due to compliance obligations under FATCA (Foreign Account Tax Compliance Act) - a United States (US) law aimed at preventing tax evasion by US citizens and residents (“US Persons”) through the use of offshore accounts. Similarly, under the Common Reporting Standard (CRS), Canadian residents are subject to similar disclosure requirements.
As part of this compliance, all Indian financial entities must share client information with the Government of India, which then passes it on to the US and Canadian authorities. To avoid the complexity of these disclosures, many AMCs choose not to onboard US or Canadian-based NRIs at all.
The few fund houses that do accommodate them, such as Aditya Birla Sun Life Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, ICICI Prudential Mutual Fund, Tata Mutual Fund, and Nippon India Mutual Fund, have special onboarding and transaction requirements. These usually include offline transactions, a self-declaration form related to FATCA or CRS, and in some cases, restrictions on investing in close-ended or certain high-compliance schemes. According to MFU (Mutual Fund Utilities India Pvt. Ltd.), only 10 of 23 funds offer online transactions to American and Canadian investors. And even for those, you have to be physically present in India to make lump-sum payments.
Is there a simpler way for NRIs to invest in Indian mutual funds?
Although it is quite rewarding in the end, investing in Indian mutual funds as an NRI is a bit of a cumbersome process. In many cases, once the onboarding is done, your investment journey can be smooth and efficient. However, this is not the only option. As an NRI, you can also explore investing via GIFT City (Gujarat International Finance Tec-City). It is India’s very first International Financial Services Centre (IFSC) that operates as an offshore financial jurisdiction. GIFT City investments do not require an NRO/NRE account or complicated KYC procedures. You also get many tax exemptions, and your money is fully repatriable. It is an option worth exploring. If you are interested, you can check out our other blogs.
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