As India takes giant strides on the path to development and gets set to meet its target of a $5 trillion economy, the prospect of participating in its financial markets is an opportunity for wealth creation for Indians residing in the country and those settled overseas. Towards this, Mutual Funds offer a structured avenue for Non Resident Indians (NRIs) to start investing into Indian capital markets and have their investments managed by a professional.
In the latest episode of Mint Money Shots, presented by Invesco Mutual Fund, Deputy Editor at Mint, Neil Borate spoke about how Mutual Funds offer an easy and relatively cost-effective way to grow your wealth without the hassle of managing individual stocks. He also offered effective tips on how NRIs can invest into Mutual Funds while living abroad. Watch the full episode below,
Why Mutual Funds are a compelling option
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 February 2025, 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 compelling 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.
“Let’s break it down. Mutual funds provide a streamlined way for NRIs to participate in India’s financial markets. They offer diversification across sectors and asset classes, professional fund management and long-term growth potential,” said Borate.
Before you start your 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 Securities and Exchange Board of India (SEBI). KYC verification is a mandatory regulatory requirement for all new investors in the Indian financial market.
“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,” Borate explained.
The documents required for KYC process are:
· Passport
· PAN card
· Overseas address proof, utility bill or driving license
· NRI’s Continuous Discharge Certificate or CDC (to be submitted in case of merchant navy)
· Cancelled cheque or bank statement
· FATCA declaration
Step 2: Choose your bank account
Next, you need an Indian bank account. According to Borate, 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
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.
“Mutual funds offer NRIs a simple and diversified way to invest in India’s growing economy by completing KYC, linking the right bank account and choosing a suitable platform where you can start your investment journey with ease,” Borate concluded.