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One of our readers wrote to us with this query:
My daughter is an NRI. She spends 4 months in India every year.
I would like to understand if she can become a mutual fund distributor in India. Also, can she source business from investors in Europe and US?
Shyam Maheshwary
Dear Shyam,
Thanks for writing to us.
Yes, AMFI norms say that any individual can become a mutual fund distributor be it resident or NRI.
Clearly, your daughter can become a mutual fund distributor in India. However, since she is an NRI, she is not allowed to onboard any resident Indian as her client. NRI MFDs can only source business from NRI investors and foreigners.
NRI clients can take exposure to Indian equity and debt markets through mutual funds. Investment in mutual funds is to be made in rupees. Also, returns earned on the investment are taxable.
Post Foreign Account Tax Compliance Act (FATCA) regulations, residents of USA and Canada can only invest with a few fund houses as most fund houses do not allow such investments due to stringent reporting norms. However, your clients living in any other country can invest in schemes of any fund house of their choice.
In addition, she has to be mindful of Grey List of Financial Action Task Force (FATF). FATF was established in July 1989 by a Group of Seven (G-7) countries in a Summit held in Paris. The key objective of FATF was to examine and develop measures to combat money laundering, terror financing and human trafficking.
Fund houses can receive inflows from countries falling under grey list of FATF only if they do ‘enhanced due diligence’ of such clients. Remember that the responsibility of clients from grey list countries is on the fund house.
Regards,
Team Cafemutual