Friday, July 15, 2011

FOREIGNERS ALLOWED TO INVEST IN MUTUAL FUNDS

Framework of the Direct Route for Investing


  • A foreign investor opens a Demate account in India
  • Place an order to buy MF units directly on the depository participant
  • Remits money directly to DP, which is mandated to report to the custodian on the daily basis
  • MF deposits the units according to investor's instructions in the demat account
  • MF units can be sold foreign exchange remitted by the MF to the DP
Framework of unit confirmation receipt (UCR) system

  • A foreign Investor goes to an overseas depository 
    and hands over foreign currency
  • Place an order with the depository to buy units of 
  • India n MFs
  • The depository receives cash and remits to the 
  • costodian bank in India , which buy the MF units to 
  • the investor's instruction
  • The depository issues UCRs against underlying units 
  • to foreign non-institutional investors
  • UCRs can be surrendered for cash with the depository
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