Well way back in the year 2001, we were a group of people who attended a mutual fund training program. Here we were taught some very important things. One of them was

“Who can invest in a mutual fund” ….Uma Shashikant gave us this answer:

Now let us see who all can invest in Mutual Funds India

Residents including
1. Resident Indian Individual/ HUF
2. Indian Companies/Partnership Firms
3. Indian Trusts/Charitable Institutions
4. Banks/Financial Institutions
5. Non-Banking Finance Companies
6. Insurance Companies
7. Provident Funds

8. Mutual Funds

Non Residents including
9. Non-Resident Indians, and Persons of Indian Origin
10. Overseas Corporate Bodies (OCBs) and

Foreign entities, viz
11. Foreign Institutional Investors (FIIs) registered with SEBI.

Foreign Citizens/entities are not allowed to invest in Mutual Funds in India.

Now the whole media is excited because Pranab has allowed FIIs registered with SEBI to invest in mutual funds…I did not understand the fuss….


will some of my friends explain please??

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  1. Hi Subra,

    It would be for those foreign citizens from India, who want to invest in Mutual funds of India. But they are HNIs and they have never visited India once and have high esteem because of their parents and grand parents 🙂


  2. I think now, Foreign nationals who are KYC compliant can directly allowed to invest in mutual funds. But the available rule is for registered Foreign institutional investors to invest in any capital market instruments.

  3. are FIIs going to bet on the skills of prashant jain for example? or will they stick to the mark mobiuses/ morgan stanley indices. it is a moot point.

  4. What we heard is just a statement forming part of Budget Speech on Feb 28th 2011.

    There are many many things that need to be squared up before a ‘formalized mechanism’ finally sets into place.

    Infact there are more questions than answers as how things stand today.

    For example (merely indicative, there will be MANY MANY more such questions as we think more):

    1. What are the capital market regulatory requirements – in the Foreign Investor’s Country and in India? How will a foreign individual investor be subjected to the ‘cross-regulatory interplay’? To be much more clear, does ANY mutual fund scheme (for example HDFC Top 200) fulfill all the regulatory guidelines of US-SEC so that a USA domiciled individual investor can invest into it?

    2. How will ‘Tax Deducted At Source’ provisions kick in for: (a) dividends (b)capital gains ?

    3. How are the ‘Foreign Currency Conversion to Rupees (and vice-versa for redemption)’ going to be accomplished?

    4. Once Indian Mutual Funds start marketing campaigns in foreign countries, how fair it will be, for Indian Domestic Investors (current unit holders) to pay up for such campaigns in the form of fund expenses? This is a question of ethics for the mutual fund itself.

    5. Is a Foreign National (anyone not holding Indian Passport) eligible to apply for a PAN Card in India? What about the rest of the KYC Process?

    so on.

  5. frankly to think the sales guys in the US or any other part of the world are dying to sell Indian funds is a joke. With zero entry load what is the incentive for the sales team? Trail commission? what a joke..

    hmmm so this is a fantastic thing which will remain on paper…

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