NRI’s Investments In Mutual Funds On The Rise

Reserve Bank of India (RBI) on September 17 published the results of the 2018-19 round of the Survey of Foreign Liabilities and Assets of the Mutual Fund (MF) companies. The findings of the survey covers 44 Indian MF companies with their respective Asset Management Companies (AMCs), which were held or acquired by foreign assets and liabilities during 2018-19 or in the preceding year. To conduct the survey the information on the stock of external assets and liabilities of AMCs were taken from the annual return on foreign liabilities and assets. According to the findings, the value of Non-resident Indians (NRIs) investment in Indian MFs holding was Rs. 93,340 crore in March ending 2019 as compared to Rs. 85, 670 crore in March ending 2018.  

“Foreign liabilities of MF companies (US $ 13.5 billion) in the form of non-residents’ investments in the units substantially exceeded their foreign assets in the form of overseas equity investments (US $ 0.7 billion) in March 2019 with both foreign liabilities and foreign assets recording increases during 2018-19,” stated the survey. The biggest investors were from UAE, the UK and the USA which together accounted for one-third of the MF units held by non-residents. “The USA (44.6 per cent share in total foreign assets) and Luxembourg (41.1 per cent) remained the preferred investment destinations for MF companies,” highlighted the survey.  

However, MF units held by non-residents in Mauritius and Singapore declined post the amendment of Double Taxation Avoidance Agreement (DTAA) with respect to withdrawal of capital gains exemption held in a phased manner, which was effective from April 2017. “Non-residents in the UK held over half of the foreign liabilities of AMCs in March 2019; AMCs’ equity liabilities to non-residents in Japan, Mauritius and Hong Kong declined during the year due to capital repatriation and reduction in market value of their investment,” noted the findings.