Best Investment Opportunities & Options in India for NRIs…!!

Indian financial markets are closed to foreign citizens holding a foreign passport; however PIOs (person of Indian origin) and OCIs (overseas citizenship holder of India) can invest money in the Indian capital markets. Primarily, they need to have a bank account in India to invest money in Indian mutual funds. The NRI bank account that can be used for a mutual fund investment can be either an NRE or an NRO bank account.

Specifically, an NRE bank account is known as a non-resident external account and NRO stands for non-resident ordinary account. An NRE account is one which an NRI can use to invert money into mutual funds on a repatriable basis, meaning that whatever amount he invests can be taken back abroad along with the profit generated with such types of investments. On the other hand, an NRO bank account is one which does not have a repatriation facility.

Non Resident Indians including PIO (person of India origin) holding PIO card and OCI (overseas citizens of India) can make investments in Indian Capital Market.

From now on, for simplification we would be using the term NRI/NRIs in general for all non resident Indian categories, either it be a PIO (holding PIO card) or an OCI.

Before we get into the Trading details, we need to understand a little more about these 2 types of NRI bank accounts mainly:

a) NRE Bank Account.

b) NRO Bank Account.

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Under NRE [Non Resident (External) Rupee Account] accounts, funds can be repatriated whereas funds under NRO [Ordinary Non Resident Rupee Account] accounts are non repatriable.

1. NRO Bank Account: Non-Resident (Ordinary): NRIs can also use this account to invest into Mutual Funds of India and IPOs on non-repatriable basis.

2. NRE Bank Account: Non-Resident (External) Rupee Account: Can also be used by NRIs to invest in Indian Mutual Funds on repatriable basis.

For investments in Indian stocks, an NRI needs an NRI bank account, a PIS account, and a demat plus trading account with a broker for online trading.

Important Documents needed for Trading:

1. For NRIs documents required are: PAN Card + Indian passport copy.

2. For OCIs: OCI Card copy + PAN Card

3. For PIOs: PIO Card + Foreign Passport Copy showing Indian birth place + PAN Card.(More details on these rules can be obtained from

NRIs can invest in both Primary Market and Secondary Market through a registered broker. These brokers offer wide range of services to ensure that NRIs feel at home while they take their investment decisions.

NRI Mutual fund investment in India can be done in 2 different ways.

Categorically speaking:

1. Investments via using Power of Attorney.

2. Investments without power of attorney.

Mutual Fund Investments for NRIs can also be done in a conventional way (safe). This conventional way is explained with an example considering us as a mutual fund distributor helping you with your mutual fund investments. Must: PAN card & NRE / NRO bank, and KYC if investment > Rs.50,000

How NRIs & PIOs can invest in Mutual Funds & Stocks of India?

How can Non Resident Indians & People of India origin make investments in the Indian Stock Markets?

There are a variety of investors in stock markets throughout the globe, but all of them call be divided into two basic groups. These groups are known as the Individual investors and the Institutional investors. An Individual investor is an investor who is investing with their own money. An Institutional investor is an investor such as a big company who invests others money, such as a client or a share-holder. Indian markets are open to NRIs living abroad for buying & selling shares. Though shorting is not allowed in the Indian share market but they can buy and sell stocks.

Now, there are two basic types of investing. These are called foreign and domestic. Only an Institutional investor can be separated into these two groups. These groups are not for individual investors. The groups for Individual investors are Resident or Non-Resident.

There are also 4 different market participant types for stock markets over the globe. Some countries have free markets with very little rules, but most countries have some rules.

Here is some information on the four types in India:

Resident Indian: You can invest or trade in India without very many rules or restrictions. You have full access to India stocks. You would still have to abide by SEBI and NSE – National Stock Exchange / BSE’s – Bombay Stock Exchange rules and regulations though.

Domestic Institutions: You can also freely invest in India Stocks. Domestic Institutions is also including the mutual funds and financial institutions.

Nonresident Indians: You have very special provisions, but can invest or trade freely in the India stocks and stock exchanges.These can be categorized from PIO – person of Indian origin and OCI – Overseas citizen of India.

Foreign Individual Investors (also Nonresident): If you are a citizen of any other country besides India, Nepal, Bhutan, and Pakistan, then you cannot invest in India Stocks. Although you cannot invest directly, there are indirect ways of investing in India. The most popular two ways are American Depository Receits and Mutual funds by foreign markets with Indian Companies.

Foreign Institutional Investors: You can invest or trade freely in almost any Indian stock. Rules and regulations are held by Banks of India and other companies as well.

Opportunities for Nonresident Indians investing in India

There are two phrases that are used often when talking about this. These two phrases are Repatriation Basis and Non-repatriation basis. Investing on a Repatriation Basis means that your proceeds can be accessed in the country where you are living. If you are living in the USA and investing in India, then you can take the proceeds (Rupees) and convert it into U.S. dollars. You can do all of this without any problems. Investing on a Non-repatriation basis, you are not able to convert your proceeds (Rupees) into a foreign currency; however, most cases are on a repatriation basis.

Steps for investing in Indian stocks for NRI, PIO & OCI…

1.      You need to get a PAN card. You can get one from the Income Tax Department of India. It is a requirement for everyone to have a PAN to invest or trade Indian stocks, even NRIs. You can download the application for a PAN card at It’s free!

2.      Next, you need to open at least two different bank accounts that have been approved by the Reserve Bank of India and marked “DESIGNATED”. A few good banks would be ICICI bank, Citibank, and SBI. Whatever bank you decide to choose, make sure they have a branch in you local town and state that you are living in. Also, and most importantly, make curtain that the bank you choose is affordable.

3.      Now, you need to open a Demat Account. The demat account will maintain all of your stock balances and transactions. In order to open one, you will have to do it though a DP. If you check with your bank, the chances are, are a DP too. When you choose a DP, make sure that they are very informed about NRIs and demat accounts and that they are affordable.

4.      Lastly, you will need to open an account with a stock broker. You will need a stock broker to take care of your buy & sell orders. Open an account with a broker who is a member of a stock exchange in India. The two recommended stock exchanges are NSE and BSE. When you are choosing a broker, make sure that they are registered with SEBI. Also, make sure that they are on good terms with your bank in which you opened your accounts. And last, check to see that they are dedicated and again affordable.

Some good online brokers that assist NRIs to invest in Indian mutual funds & allow them trade online in Indian sharesare:

How can NRIs Invest in Mutual Funds of India?

In India, the mutual fund market is one of the fastest growing markets. It is also improving greatly year by year. The mutual fund market industry manages a great amount of money since it has grown in size.

A mutual fund is bought by a group of people with the same idea of how much money they want to earn. They all purchase shares and when the fund makes money, the profit is split among them. Investing in a mutual fund gives a good opportunity to gain a lot of profit and only spend a little bit of money.

India has a very active market that is preparing itself for becoming an overseas market for investing around the world. A person who is looking to invest in India has more of a opportunity to make profit if they are looking to invest long term over short term. India is the fifth largest economy in the world. It also has the most profiting potential in all fields of work and investment.

There are 4 phases that India went through involving mutual funds. The first phase started in 1964 and ended in 1987. The second phase started in 1987 and ended in 1993. This second phase was also known as the start of Public Sector Funds. The third phase started in 1993 and ended in 2003. This third phase was also known as the start of Private Sector Funds. The forth phase started in 2003 and is still active today.

There are an abundance of companies involving mutual funds. Infact there are many NRI advisers or investment companies in India that can assist non resident Indians living abroad to invest in top mutual funds of India. We have listed some of them for you: ABN AMRO Mutual Funds, Mutual Funds, HDFC Mutual Fund, HSBC Mutual Funds, Prudential ICICI Mutual Funds and State Bank of India Mutual Funds.