FII Investors
FII s may pay for their subscription amounts out of funds held in Foreign Currency Account or Non-resident Rupee Account maintained in a designated branch of an authorized dealer [Clause 3(1) of the Regulations]. Payments may be made by way of cheques payable at a city where the application is accepted by any Mutual Fund ISC.
Similarly, in case of an application made under a Power of Attorney or by an FII, the original Power of Attorney (or a duly notarized certified true copy thereof), or the relevant resolution/authority to make the application, along with a certified copy of the Memorandum and Articles of Association and/or bye laws and Certificate of Registration should be submitted to the nearest ISC. The officials should sign the application under their official designation.
The NRI s/PIO s/FII s shall also be required to furnish such other documents as may be desired by the Fund in connection with the investment in the Schemes.
Does an NRI, FII require any approval from the RBI to invest in mutual fund schemes?
No special approval is required.
NRI s/PIO s/FII s have been granted a general permission by RBI [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] for investing in /redeeming units of the schemes subject to conditions set out in the aforesaid regulations.
Can an NRI invest in foreign currency?
An NRI choosing to invest in a Mutual Fund cannot make the investment in foreign currency. (Any investment in India except in FCNR account is in rupees only) He needs to give us a Rupee cheque from his NRE, NRO, and bank account in India . He may also send a Rupee cheque from abroad payable in a bank in India .
Whether the income earned on Investments is repatriable?
NRI s/PIO s can invest in units of the schemes on a fully repatriable basis or on a non-repatriable basis where the principal is non-repatriable, but the Income distributed is repatriable
The answer to both the questions is No.
Can an NRI gift the units of a mutual fund to another NRI?
The Foreign Exchange Management Act, 1999 (the "Act") or the rules or regulations under the Act does not contain any specific provision, which prohibits an NRI from gifting the units of a mutual fund to another NRI. However the RBI may by regulations prohibits, restrict or regulate the transfer or issue of units by a person resident outside India . Currently there are no regulations issued by the RBI prohibiting an NRI from gifting units in a mutual fund.
For an application for investment when will the NRI be allotted units?
If an application is received before the prescribed cut off timings on any business day, the allocation of units will be at the applicable NAV adjusted for entry load, if any on the particular scheme. All applications received after the prescribed time will be treated as having been received on the next business day and the units allotted accordingly.
