Is KYC Mandatory for NRIs to Invest in MFs in India?

By admin_mutual | Jan 31, 2023

A PIO (Person of Indian Origin) or Non-Resident Indian (NRI) can profit from and contribute to the nation’s progress by investing in mutual funds. Despite the fact that there is not a specific mutual fund specifically for NRI investors, NRI-targeted funds are offered by numerous AMCs (Asset Management Companies).

The easiest method to invest in the increasingly complicated financial markets is through mutual funds. With the benefits of Mutual Funds, such as diversification, liquidity, competent management, etc., you may be certain of peace of mind regarding the growth of your hard-earned money. You must complete out the physical forms and submit them to your branch with a copy of your KYC in order to invest in mutual funds, using the offline approach.

Investing in MFs in India – Is KYC mandatory for NRIs?

NRIs and PIOs of Indian descent may make Indian mutual fund investments on both fully repatriable basis and non-repatriable basis.

NRIs must, nevertheless, adhere to all legal requirements, including completing KYC before investing. However, it should be noted that certain nations, like the US and Canada, have banned NRI investing in mutual funds with no need for the necessary disclosures. NRIs from these nations should thus first discuss the viability of Indian funds investments with their adviser before doing so.

Most of the advantages and conveniences available to native Indian investors are also available to NRIs while investing. They are able to invest through SIPs, switch investments as needed, choose between growth and dividend alternatives, and repatriate redemption funds anytime they want. Thus, NRIs and PIOs are able to invest in and profit fully from a wide range of Mutual Fund schemes in India.

KYC requirements

Before you begin investing in India, you must complete KYC requirements. You must send copies of your birth certificate, address evidence, two passport-sized photos, and your passport’s relevant pages (just those pages indicated by the fund house). You might need to go to the Indian embassy in your own country if the relevant fund house or bank insists on in-person verification.

The term “Know Your Customer” (abbreviated as “KYC”) refers to the Customer Identification Procedure that takes place as part of the process of opening up an account with some financial agency.

Typically, a KYC or Know Your Customer process consists of two parts:

• Part I includes the investor’s basic and standard KYC information as required by the Uniform KYC (Central KYC registry), which all registered financial intermediaries must utilize.

• Part II extra KYC data that may be requested individually by the financial intermediary creating the investor’s account, such as a depository participant, mutual fund or stock broker.

Through pertinent supporting papers, such as required picture identification (such as a PAN card or an Aadhar card), address verification, and in-person verification, KYC proves an investor’s identity and address (IPV). The Prevention of Money Laundering Act, 2002 and its implementing rules, when read in conjunction with the Obligations of Securities Market Intermediaries / Combating the Financing of Terrorism (CFT)/, SEBI Master Circular on AML or Anti Money Laundering Standards, require KYC compliance.