ETF For NRI

Description

An Exchange-Traded Fund (ETF) is a type of investment fund and exchange-traded product (ETP) that trades on stock exchanges, much like stocks. ETFs typically hold assets such as stocks, commodities, or bonds and generally operate with an arbitrage mechanism designed to keep the trading close to its net asset value, although deviations can occasionally occur.

For NRIs (Non-Resident Indians), investing in ETFs generally follows similar guidelines as for resident Indians, with a few additional considerations:

1. Eligibility: NRIs are generally allowed to invest in ETFs in India, subject to regulations set forth by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). They need to invest through the Portfolio Investment Scheme (PIS) route for purchasing ETF units on a repatriable or non-repatriable basis, depending on their NRI status.
2. Limits: The limits for investing in ETFs for NRIs are typically aligned with the overall limits set for foreign portfolio investments in India, which are periodically revised by the RBI and SEBI. NRIs must adhere to these limits while investing in Indian ETFs.

For an NRI (Non-Resident Indian) to invest in Exchange-Traded Funds (ETFs) in India, the documentation typically required includes:

1. KYC Documents:
   • Proof of Identity: A copy of your valid passport.
   • Proof of Address: Submit a copy of any of the following documents showing your overseas residential address – utility bill (electricity, water, gas), bank statement, or rental agreement.
   • Overseas Address Proof: A document issued in the country of residence confirming your overseas address.
   • PAN (Permanent Account Number) card: A PAN card issued by the Indian Income Tax Department is mandatory for investing in Indian ETFs.
2. Proof of NRI Status:
   • Proof of Non-Resident Indian (NRI) status: Provide documentation such as a valid visa or work permit from your country of residence.
3. Bank Account Details:
   • Details of your NRE (Non-Resident External) or NRO (Non-Resident Ordinary) bank account: Information about the account you’ll use for investment transactions and fund transfers.
4. Trading and Demat Account:
   • You’ll need to open a trading and Demat account with a registered brokerage firm or financial institution in India. The account opening form and associated documents will be required for this.
5. Foreign Inward Remittance Certificate (FIRC):
   • FIRC is required for investments made through foreign currency. It is a document that proves the source of funds transferred from abroad.
6. Tax Residency Certificate (TRC):
   • TRC may be required in some cases to claim benefits under the Double Taxation Avoidance Agreement (DTAA) between India and the country of residence.
7. Power of Attorney (POA) (Optional):
   • Some brokerage firms may require a POA authorizing a person in India to manage your ETF investments on your behalf.
8. Additional Documents:
   • Depending on the brokerage firm’s requirements, additional documents or declarations may be necessary.