1. 1.       There are certain clauses to be fulfilled to get NRI, PIO, FII and OCB Status.

1)    NRI (Non-Resident Indian): An Indian citizen or a person of Indian origin who stays abroad for employment, business or vocation outside India, or stays abroad under circumstances indicating an uncertain duration.

2)    PIO (Person of Indian Origin: A citizen of any country (other than Bangladesh or Pakistan), if the person: (a) at any time held an Indian passport; or (b) or the person's parents or grandparents were citizens of India; or (c) is a spouse of an Indian citizen, or of a person referred to in (a) or (b) above.

3)    FII (Foreign Institutional Investor): An institution established or incorporated outside India which proposes to invest in Indian securities and is registered with SEBI.

4)    OCB (Overseas Corporate Body): Overseas companies, partnership firms, societies and other corporate bodies owned predominantly by non-resident persons of Indian nationality or origin outside India.

  1. NRI’s Bank Account in India: NRIs can maintain accounts in rupees as well as in foreign currencies.
  2. 3.       Types Of Rupee Accounts NRIs Can Maintain:

There are 4 types:

1)       NRE(Non-Resident External Account): This is a Rupee account from which funds are freely repatriable. It can be opened with either funds remitted from abroad or local funds which can be remitted abroad.

2)       NRO (Non-Resident Ordinary Account):  This is a Rupee account and can be opened with funds either remitted from abroad or generated in India. These funds are non-repatriable. However, under certain circumstances, these are allowed to be repatriated.

3)       NRSR(Non-Resident Special Rupee Account):Cannot be normally remitted abroad, and have to be used only for local payments in rupees.

4)       FCNR (Foreign Currency Non-Resident Account): This account is similar to the NRE account except that the funds are held in foreign currencies, i.e. in Pound Sterling,U.S. Dollar, Euro and Japanese Yen. FCNR accounts can be maintained only in the form of 'term deposits', i.e. a deposit kept for fixed periods ranging from 6 months to 3 years.

  1. 7.       NRIs and PIOscan invest in mutual funds in India:

Investment by NRIs andPIOs in the Mutual Fund Schemes is based on the relevant provisions of the Income Tax Act-1961, regulations issued under the FEMA-1999 and the Wealth Tax Act-1957. All investors are advised to consult their own tax advisors with respect to the specific tax and other implications arising out of their participation in the funds.

1)       Repatriable Basis: When NRIs and PIOs apply to purchase units on a repatriable basis, payments may be made inward remittances, or by cheques drawn on the NRE/FCNR account of the investor payable at the city where the application form is accepted by any Investor Service Centres.

2)       Non-Repatriable Basis: When NRIs/PIOs apply for units on a non-repatriable basis, payments may be made by inward remittances, or by cheques/DDs drawn on the NRE/FCNR/NRO/NRSR account of the investor, payable at the city where the application form is accepted by any Investor Service Centres.


Note: In case of an application under a Power of Attorney, the original Power of Attorney or the relevant resolution/authority to make the application (or a duly notarised certified true copy thereof), 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 ISC within 7 days from the date of the application. The officials should sign the application under their official designation.The NRIs/PIOs may also be required to furnish other documents needed to process their investments.

  1. An NRI Does Not Require Any Approval From The RBI To Invest In Mutual Funds: NRIs/PIOs have been granted a general permission by RBI for investing in /redeeming units of the funds subject to conditions set out in the regulations.
  2. 9.       An NRI Cannot Invest In Foreign Currency: He needs to give a Rupee cheque from his NRE, NRO or NRSR bank account in India. He may also send a Rupee cheque from abroad payable in his own bank account in India.
  3. 10.    Mode of Payment for Repatriation and Non-Repatriation Basis:
    1. Repatriable Basis. Payments for the purchase of the units may be made by Indian Rupee drafts purchased abroad, or by cheques drawn on the NRE/FCNR Account of the investor, payable at the city where the application form is accepted by any Investor Service Centres.
    2. Non-Repatriable Basis: Payments for the purchase of the units may be made by Indian Rupee drafts purchased abroad, or by cheques/demand drafts drawn on the NRE/FCNR/NRO/NRSR/NRNR account of the investor, payable at the city where the application form is accepted by any Investor Service Centres.
  4. EffectingDay of NRI purchase Transaction: If an application is received before the 3 p.m. (Indian Standard Time) on any business day, the allocation of units will be based on the NAV of that business day. Applications received after the prescribed time will be effectedas the next business day transactions.
  5. Redeeming of Funds By An NRI: In the open-end schemes of mutual fund units can be purchased or redeemed at any point in time. To redeem funds, submit the redemption request to the nearest Investor Service Centre. Form must contain the investor's folio number and the amount / units to redeem. Valid redemption requests by telephone and internetare also acceptable.
  6. Payment of Redemption Proceeds: Redemption proceeds will be paid by cheque or can be directly credited in NRE/NRO/NRSR account. The cheque will be payable to the first unitholder and will include the bank account number.

1)       Repatriation ofRedemption Proceeds: The investments shall carry the right of repatriation so long as the investor continues to be a resident outside India.In case the investment is made out of inward remittance or from funds held in the NRE/FCNR account of the investor, the maturity proceeds/repurchase price of units (after payment of taxes) may be credited to the NRE/NRO/NRSR account of the non-resident investor.

2)       Non-repatriation Redemption Proceeds:

a)       Where the purchase of units is made on a non-repatriable basis, the maturity/redemption proceeds of units (after payment of taxes) will be credited to the NRO/NRSR account of the non-resident investor.

b)       Where the investment is made out of funds held in a NRSR account, the maturity proceeds/ redemption proceeds of units (after payment of taxes) may be credited to the NRSR account.

c)       Investments in units purchased in Rupees, where the investor was a resident of India and subsequently becomes a non-resident, will not qualify for repatriation of repurchase proceeds of units.

d)       The entire income distribution on the investment will, however, qualify for full repatriation. Investors are advised to contact their banks/tax consultants if they desire remittance of the income distribution on units abroad.

  1. Payment of Income/Dividend on Mutual Fund Units: The investments shall carry the right of repatriation of capital invested and capital appreciation so long as the investor continues to be a resident outside India. If the investment is made out of inward remittance or from funds held in NRE/FCNR account of the investor, the maturity proceeds/redemption of units (after payment of taxes) may be credited to NRE/FCNR/NRO/NRSR account of the non-resident investor.
  2. 15.    Tax Liability on Redemptions: Units of the fund held as a capital asset for a period of more than 12 months immediately preceding the date of transfer, will qualifying for the long-term capital gains tax rate. In all other cases, it would be treated as a short-term capital asset and would be taxed at the short-term capital gains tax rate.
  3. Tax Liability for Income Received From Mutual Funds:Income is exempt from income tax in India and the mutual funds are subject to pay distribution tax in debt oriented schemes. Hence all dividends are tax-free in the hands of non-resident investors and no TDS is applicable on the same.
  4. 17.    Mandatory to Have A Permanent Account Number (PAN): It is mandatory to have a PAN for an NRI. PAN would be required if the NRI is required to file a return in India or claim a refund of any taxes paid.
  5. 18.    Apply For A PAN: An application is required to be made in Form 49A.
  6. 19.    Proof of Tax Deduction At Source (TDS): The TDS certificate is commonly known as Form16-A. A TDS certificate is issued in the name of the investor mentioning the details of the transaction and the tax deducted.
  7. 20.    Issue of A TDS Certificate: A TDS certificate (Form 16A) will be despatched to the investor at his/her registered address along with the redemption warrant.
  8. 21.    Resident Indian or Another NRI as Joint Account Holder for an NRI: An NRI investor can jointly own a mutual fund account with a resident Indian or a Non-resident Indian.
  9. 22.    Indexation Benefit Available to NRIs: Benefit available if units are held for more than 12 months (long-term capital gain).
  10. 23.    NotLiable to the Wealth Tax: Because units issued are not considered assets under the Wealth-Tax Act.
  11. Dividend Repatriable: Dividend income earned from mutual fund investments done on a non-repatriable basis from NRO account qualify for full repatriation.
  12. Faxing A Request By An NRI Followed By The Original Documents: Units cannot be redeemed or allotted on the basis of fax applications, because the request lacks a valid signature cannot be processed due to legal restrictions.
  13. A Power of Attorney (POA) Can Invest on Behalf of The NRI Investor: In a mutual fund the POA has the authority to invest on behalf of the NRI investor and sign documents for initial / additional purchases and redemptions.While applying for purchase of units the POA holder needs to submit the original POA/a copy duly notarised should be submitted. The POA should contain the signature of both the first holder and the POA holder. POA holder has the right to transact on behalf of the NRI investor, if the POA is registgered and signature is verified for processing any transaction/request.
  14. 27.    Nomination by NRIs Allowed in Mutual Funds: Nominationa is allowed only for Individuals/HUFs.
  15. 28.    An NRI as Nominee for AResident Indian Investor: An NRI can be a nominee to anmutual fund account of a resident Indian investor.
  16. Investments by APerson Living inUSA: There are certain mutual funds which do not permit investments in their schemes as they are also governed by the laws in US (eg. Franklin Templeton Mutual Fund, Fidelity Mutual Fund, HSBC Mutual Fund, PNB Principal Mutual Fund) and the Schemes have not been registered in the USA which is a mandatory requirement for these fund houses. Applicants for Units may be required to declare that they are not a U.S. Person and are not applying on behalf of any U.S. Person.(U.S. Person shall mean any person that is a United States Person within the meaning of Regulations under the US Securities Act of 1933, as the definition of such term may be changed from time to time by legislation, rules, regulations or judicial or administrative agency interpretations.)


Overseas Citizenship of India (OCI)

Eligibility for OCI: Persons of Indian Origin, who migrated from India after 26 January, 1950, and

  1. who were citizens of India on or at anytime after 26/01/1950 or
  2. who were eligible to become Indian citizens on 26/01/1950 or
  3. belonged to a territory that became part of India after 15/08/1947 andtheir children and grand children,whose present nationality is such that the country of nationality allows dual citizenship in some form or the other under the local laws, will be eligible to be registered as OCI. Minor children of such persons are also eligible for registration as OCI. (minor children of whom both parents are Indian citizens are not eligible for OCI.)


 OCIs holder can not hold the following positions:

  1. Public employment,
  2. election to Constitutional offices like President/Vice President/Judges of the Supreme Court or High Courts
  3. Members of Parliament or Legislative Assembly/Council or
  4. right to vote under Representation of People Act, 1950.


A person registered as OCI is entitled to the following benefits:

1. Grant of multiple entry, multi-purpose lifelong visa to visit India

2. Exemption from registration with FRRO/FRO for any length of stay in India

3. Parity with NRIs in economic, financial and educational fields except in matters relating to acquisition of agriculture/plantation



  1. The grant of OCI is extended to citizens of all countries which allow dual nationality (other than those who had ever been citizens of Pakistan and Bangladesh).
  2. The amended legislation further reduces the period of stay from 2 years to 1 year in India for OCI, who is registered for 5 years, to become eligible for grant of Indian citizenship.
  3. An Indian citizen cannot have citizenship of any foreign country. One ceases to be a citizen of India, if voluntary acquires the citizenship of any foreign State.

Persons registered as OCI are not Indian citizens. This is a new category of citizenship created under the statute with certain restricted rights as compared to Indian citizens.

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