How NRIs can invest in mutual funds in India

Yes. India's foreign-exchange rules let an Indian citizen living abroad (an NRI) invest in Indian mutual funds. An Overseas Citizen of India (OCI) cardholder can invest too. You pay in rupees from an NRE, FCNR(B) or NRO account, or by sending money from abroad. That choice decides whether you can later take the money back abroad. NRIs can invest in mutual funds through Koshex.

Can NRIs invest in mutual funds in India?

Yes. RBI's rules allow NRIs and OCIs to buy units of Indian mutual funds on two bases: repatriation and non-repatriation. Repatriable means you can send the money back abroad. Non-repatriable means it stays in India.

Here is who the rules mean:

• An NRI is an individual who lives outside India and is a citizen of India.
• An OCI is an individual who lives outside India and is registered as an Overseas Citizen of India cardholder.

For funds that hold 50% or less in equity, RBI's directions let NRIs and OCIs buy without any investment limit, on either basis. Equity-heavy funds are covered by a separate set of RBI rules that allow both bases too. So in effect, exchange-control law lets you buy units of Indian mutual funds of every kind.

The rules in force today are the Non-debt Instruments Rules 2019, the Debt Instruments Regulations 2019 and the Mode of Payment Regulations 2019.

Two cautions. First, for investing, what matters is the foreign-exchange law's test of where you are resident, which is not the same as the income-tax test. Your bank and fund house go by the status you declare. Second, each fund house decides whether it accepts you. SBI Mutual Fund's Statement of Additional Information is a document the fund house publishes. It lists NRIs on full repatriation or non-repatriation basis among its eligible investors.

NRE or NRO: which account do you invest from?

The account you pay from decides where the money can go when you sell. Three kinds of account come up:

• An NRE account is a bank account NRIs can open. Money can come in from abroad and go back out abroad.
• An FCNR(B) account is a fixed deposit held in a foreign currency.
• An NRO account is a rupee account for money you earn or receive in India, such as rent, as well as money sent from abroad.

This is how the two bases line up:

The rules also let you invest money from an NRE or FCNR(B) account on a non-repatriation basis. In that case the sale money is credited only to your NRO account, whichever account paid for the units.

Fund houses deal in rupees only, so you can't pay them in dollars directly. Franklin Templeton's Statement of Additional Information says redemptions and IDCW (payouts from a fund's income or gains) are payable in rupees only.

A worked situation

Neha moved to Dubai for work in 2025. She sends ₹3,00,000 of her salary to her NRE account and invests it in a fund. That is a repatriation-basis investment.

Rent from her flat in Pune lands in her NRO account, and she invests ₹1,20,000 from there. That is a non-repatriation-basis investment.

When she sells, the first sum can go abroad or into her NRE account. The second can be credited only to her NRO account. From there she can send it abroad within the US$1 million a financial year that banks may allow from NRO balances, with documents.

What about tax when you sell?

Tax is deducted at source (TDS: tax taken out before the money reaches you) from an NRI's capital gains when units are sold. The rates and how to claim treaty relief are in our article on taxation of mutual funds for NRIs.

How do you invest as an NRI, step by step?

The steps follow the same order whichever account you use:

1. Pick the account you will pay from, as in the table above.
2. Complete KYC and the FATCA/CRS declaration (both explained below).
3. Give the fund house's NRI declaration where it asks for one. SBI Mutual Fund's Statement of Additional Information, for instance, asks NRIs for one along with the application form.
4. Choose a fund. Our guide on how to choose the right mutual fund lists the factors.
5. Invest by SIP or lump sum. The SIP explainer covers the first.
6. When you sell, the money returns as the table shows. Our step-by-step guide to selling covers the mechanics.

If you would rather not do this yourself, a power of attorney (a document that lets someone in India act for you) is another route. An application under one needs the original document duly notarised or a certified true copy, according to Franklin Templeton's Statement of Additional Information. SBI Mutual Fund's document also makes KYC mandatory for power of attorney holders.

You don't need a demat account to invest; units can be held in a statement of account instead. A demat account holds them electronically, and our article on whether you need a demat account explains the difference. For the basics of buying, see how to invest in mutual funds online and offline.

What KYC do NRIs need?

NRIs complete KYC with a PAN, a passport (or OCI card) and proof of their overseas address. KYC, short for know your customer, is the identity check every investor passes before buying a fund.

If your passport, driving licence or Aadhaar shows an Indian address, you also have to give another proof for your current address.

Aadhaar is optional. PAN stays mandatory. An NRI without Aadhaar is exempt from linking PAN to Aadhaar once the NRI updates their status to non-resident on the income-tax portal.

Doing KYC from abroad

SEBI's current rules treat a first KYC from outside India and an update differently:

• A first KYC from outside India is done on paper. The NRI fills and signs the KYC form and sends it with certified copies of their identity and address documents. The certifier can be a notary public, a court magistrate or judge, or the Indian embassy or consulate where you live. An official of an overseas branch of an Indian bank can also certify them.
• Online KYC currently needs you to be in India when you do it.
• Since 10 December 2025, an NRI can update an existing KYC record from abroad.

An NRI can complete KYC in the Koshex app.

Registered or validated

KYC records carry a status, and a validated status needs your mobile number and email checked. e-Aadhaar, DigiLocker and Aadhaar e-sign can be used only with an Indian mobile number.

So an NRI who uses a passport and overseas address proof without Aadhaar is likely to end up with a Registered status. The same goes for an NRI with no Indian mobile number for the OTPs. A new fund house may then ask for documents again. An NRI with Aadhaar and an Indian mobile number can reach Validated. Our mutual fund KYC article explains the statuses.

What is the FATCA and CRS declaration?

Every investor also signs a FATCA/CRS declaration. It is a statement of the country where you pay tax, which fund houses must collect. The rules require the self-certification as part of account opening, and the institution has to update it when you report a change.

Canada and the US: can NRIs invest?

Koshex accepts NRIs living in the US or Canada. Fund houses set their own rules, though, and many restrict US and Canadian residents.

Indian rules don't bar them. Fund houses restrict them because of those countries' securities and tax-reporting laws. Some refuse them; others accept investments only when you are physically in India and apply on paper with a declaration.

Three fund houses show the range, each in its own document:

• SBI Mutual Fund's Statement of Additional Information excludes residents of the United States of America and Canada.
• Axis Mutual Fund's scheme document accepts NRIs and OCIs living in the US or Canada only if they are in India when they invest. They also have to submit a physical transaction request.
• Baroda BNP Paribas Mutual Fund's scheme document lets NRIs from the US or Canada invest only when physically present in India. They must apply on paper, with a declaration. It adds that an existing holder who later becomes a US person or Canadian resident can't buy additional units except in that manner.

These are examples from three documents, not a list of what every fund house does. Check the fund house's rules before you invest.

What happens to your mutual funds when you become an NRI?

You don't have to sell your mutual funds when you move abroad. Units bought while you lived in India can be kept, but they become non-repatriable. The foreign-exchange law says that when a resident's status changes to non-resident, the investment is treated as non-repatriation. Franklin Templeton's document puts it the same way for its own funds.

Tell the fund house, and update your KYC with your new residential status, overseas address and tax residence. Updating KYC can now be done from abroad. Your FATCA/CRS declaration has to be updated too.

Your resident savings account also has to be redesignated as an NRO account when you become a non-resident. A SIP is drawn from a bank account. If its mandate sits on that account, new instalments will be paid from an NRO account, so the units they buy will be non-repatriable. Ask your fund house whether your SIP can continue from the redesignated account.

When you move back, update your status and bank account with the fund house. Your units stay invested. An NRO account may be designated a resident account on your return. An NRE account has to be redesignated, or its funds moved, immediately.