Welcome to Non Resident Indian (NRI) Corner of Principal Mutual Fund

Click here to visit the NRI section of the Reserve Bank of India (RBI) for more details.

With India on its way to becoming a superpower in the world economy that is mainly due to two factors: the contribution of Indians around the world and the Indian economy itself. The strong Indian community abroad has contributed through various fields and are one of the most sought after professionals managing some of the top companies around the world.

It has always been our endeavor to serve the NRI Community's growing needs as investors. We have tried to create an exclusive section called 'NRI Centre' for your mutual fund query and/or information.

Make the most of the attractive investment opportunities in India. But before you do that know all that you need to know about investing. Here are a few answers to some fundamental questions that you might have in your mind. Keep it handy for reference.

• Welcome to Principal Mutual Fund
• Investing in Principal Mutual Fund
• Principal Mutual Funds and Taxes
• Online Transactions

  Welcome to Principal Mutual Fund

Make the most of the attractive investment opportunities in India. But before you do that know all that you need to know about investing. Here are a few answers to some fundamental questions that you might have in your mind. Keep it handy for reference.

• Who is a Non-Resident Indian (NRI)?

  An Indian citizen or a foreign citizen of Indian origin who stays abroad for employment/carrying out business or vocation for 182 days or more or under circumstances indicating an intention for an uncertain duration of stay abroad is a Non-Resident Indian (NRI). Those who stay abroad on business visits, for medical treatment, study or such other purposes, which do not indicate an intention to stay there for an indefinite period, are not considered as NRIs.

• Who is a Person of Indian Origin (PIO)?

  A Person of Indian Origin (PIO) means a citizen of any country (other than Bangladesh or Pakistan), if :
  (a) He/She at any time has held an Indian passport or
  (b) He/She or either of his/her parents or grand parents was a citizen of India by virtue of the constitution of India or Citizenship Act, 1955 (57 of 1995) or
  (c) He/She is a spouse of an Indian citizen or of a person referred to in (a) or (b) above.

• What is an Overseas Corporate Body (OCB)?

  An OCB is a company, partnership firm, society or other corporate body owned directly or indirectly to the extent of at least 60% by one or more NRIs and includes an overseas trust in which not less than 60% beneficial interest is held directly or indirectly by NRIs.

• Who is a Foreign Institutional Investor (FII)?

  FII means an institution established or incorporated outside India, which proposes to make investments in Indian securities and is registered with SEBI.

• Can an NRI maintain a bank account in India?

  Yes. NRIs can maintain accounts in rupees as well as in foreign currency. However, accounts in foreign currencies can be maintained with authorized dealers/ banks only.

• What are the different types of rupee accounts that are permitted and can be maintained by NRIs?

  The three types of rupee accounts permitted, that can be maintained by NRIs are as follows :
  a) NRE : Non-Resident (External) Rupee Account
  b) NRO : Non-Resident (Ordinary) Rupee Account
  c) FCNR - B : Foreign Currency (Non -Resident) Accounts (Banks)
  Note : With effect from 01/04/2002, both NRSR and NRNR deposit schemes have been discontinued.

• What are NRE and NRO accounts?

  Non-Resident (External) Rupee (NRE) account is a rupee account from which funds are freely repatriable. It can be opened with either funds remitted from abroad or local funds maintained in NRE/ FCNR accounts, which can be remitted abroad. The deposits can be used for all legitimate purposes. The balance in the account is freely repatriable. Interest credited to the NRE accounts is exempt from tax in the hands of the NRI.
  Non-Resident Ordinary Rupee (NRO) account is a rupee account and can be opened with funds either remitted from abroad or generated in India. The amounts in such an account are generally non-repatriable. However, funds in NRO accounts can be remitted abroad subject to/as per various directives in force at the time of repatriation. More details can be found on the Reserve Bank of India (RBI) website www.rbi.org.in

• What is the distinction among NRE and NRO Accounts?

  Balances held in NRE accounts can be repatriated abroad freely, whereas funds in NRO accounts cannot be remitted abroad but have to be used only for local payments in rupees. Funds due to the non-resident account holder which do not qualify, under the Exchange Control regulations, for remittance outside India are required to be credited to NRO accounts.

  Snapshot :
  
  

  Type of Account	Currency	Repatriable / Non Repatriable
  NRE - Non Resident External	INR	Freely Repatriable
  NRO - Non Resident Ordinary	INR	Non Repatriable, Repatriable subject to RBI conditions
  FCNR - Foreign Currency Non Resident	USD, GBP, Yen, Euro, DMK	Repatriable

• Can an NRI, OCB, & FIIs invest in mutual funds in India?

  While NRIs & FIIs can invest in mutual funds in India, OCBs cannot invest in mutual funds in India.

• Does an NRI, PIO, FII requires any approval from the RBI to invest in mutual fund schemes?

  No special approval is required. NRIs/FIIs have been granted a general permission by RBI [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000] for investing in/redeeming units of the schemes subject to conditions set out in the aforesaid regulations.

• What is a PIO Card? Who Issues PIO Cards? How to get a PIO Card?

  Person of Indian Origin (PIO) Cards are issued by Ministry of External Affairs (CPV Division), Government of India to persons of Indian origin through Indian missions abroad. Specific information on rules, forms, particular offices, missions is available on the website http://www.passport.nic.in/

  Investing in Principal Mutual Fund

Before you start investing in Principal Mutual Fund schemes, equip yourself with all the functional knowledge required. A ready reckoner that will help you understand the process better. Make note of these simple yet important aspects that will not only save your time and efforts but also make investing easier.

• How does an NRI invest in Principal Mutual Fund (PMF)?

  A Common Application Form duly completed along with Rupee cheque or Rupee draft should be submitted / mailed to any of the Official Points of Acceptance of Transactions specified by Principal Mutual Fund (Principal MF). Investors can also lodge their completed application forms with brokers appointed by Reliance MF from time to time for onward submission to any of the Investor Service Centres. All cheques/DDs must be drawn in favour of "Name of the Scheme" and crossed "A/c payee" only and payable at the place where the application is submitted at the official point of acceptance.

  An NRI choosing to invest in Principal MF currently cannot make the investment in foreign currencies. The NRI investor needs to give a cheque or draft in rupees from his/her NRE, NRO bank account in India. The NRI investor may also send a rupee cheque/draft issued by an exchange house abroad drawn on its correspondent bank in India. However, for an NRI to invest it is mandatory that he/she maintains a bank account in India.

  Documents to be attached :
  If an NRI investor invests in Principal Mutual Fund Schemes through Rupee draft/Bankers cheque, then any of the following documents should be attached along with the Application Form :
  

  • A Foreign Inward Remittance Certificate (FIRC) or
  • Confirmation letter issued by the bank confirming the source of funds or
  • A photocopy of the Rupee draft/Bankers cheque

  When the investment is made by an Rupee cheque issued out of a NRE/NRO bank account in India, a photocopy of the NRE/NRO cheque should be attached along with the Application Form. Post-dated Rupee cheque will not be accepted. Please ensure that the cheques are correctly dated at the time of submission of the application forms.

• How can an NRI carry out transactions like making an additional purchase/redemption/switching?
  • Method - 1 Conventional

    Once an account is opened, the NRI investor may transact by filling up the Common Transaction Form or by simply filling the details in the transaction slip attached to the statement of the account or transaction slip downloaded from the website and mailing the same to any of the official points (As mentioned in the application form which may change from time to time) of acceptance of transactions, along with the cheque or the bank draft in case of an additional purchase.

  • Method - 2 Online
    In case the investor has an I-pin, he/she may make an additional purchase/redeem/switch online at www.principalindia.com
• What address should be mentioned on the application form? Can an NRI mention a local address for all communication?

  The application form of Principal Mutual Fund has a provision for local address, but the NRI/FII Overseas Address is mandatory. If the local address is also provided, in such cases, the Indian address is registered for the purpose of contact and the foreign as an alternative address. The Statement of Account will reflect the Indian address and the communication will be sent to this address only. However, if the investor wants the foreign address for the purpose of communication, the same can be registered accordingly.

• Can an NRI investor get the Statement of Account and other communication by email?

  Yes. One can get the following communication by email :

  • Statement of Account or
  • Quarterly Newsletter & Annual Report
  • Communication on change of address, bank, etc

  The NRI investors need to provide their email ids and subscribe for the above at the time of investing by selecting the relevant columns in the application form/common transaction form.

• What is the mode of payment for Repatriation and Non-Repatriation Basis?

  NRIs/ PIOs can invest in units of the schemes on a fully repatriable basis or on a non-repatriable basis where the principal is non-repatriable but the income distributions are repatriable.

  • Repatriable Basis :

    Payments for the purchase of the units may be made by way of Indian rupee drafts purchased abroad or by way of cheques drawn on the NRE/FCNR account of the investor, payable at the city where the application form is accepted by any of the Principal MF official points of acceptance of transactions. In case of DDs from FCNR, a Foreign Inward Remittance Certificate (FIRC) from the bankers is necessary, confirming that funds are from FCNR account and are repatriable.

  • Non-Repatriable Basis :

    Payments for the purchase of the units may be made by way of Indian rupee drafts purchased abroad, or by way of cheque/DDs drawn on the NRE/NRO account of the investor, payable at the city where the application form is accepted by any of the RMF official points of acceptance of transactions.

  • FII Investors :

    FIIs may pay for their subscription amounts by way of Indian rupee drafts purchased abroad or out of the funds held in their Foreign Currency account or Non-Resident Rupee account maintained in a designated branch of an authorized dealer. The Rupee drafts/cheque should be made payable at a city where the application is accepted by any of the RMF official points of acceptance of transactions.

• The cheque or the DD should be payable or drawn on which location?

  The cheque/DD should be payable or drawn on the location where the application is submitted and accepted i.e. at the official points of acceptance of transactions of Principal Mutual Fund.

• Will Principal MF accept an NRI application with an overseas bank account detail?

  No. Overseas bank account details are not accepted as the payment is in Indian rupees by way of cheque/direct credits.

• After an application for investment when will the units be allotted to the NRI?

  If an application is received at the official point of acceptance before the specified cut-off time on any business day, the allotment of units at the NAV of the business day shall be applicable, with adjustments for any entry load, if any, as per the provisions of the Offer Document of the relevant scheme. All applications received after the prescribed time will be treated as having been received on the next business day and the units shall be allotted accordingly. In case of liquid schemes, allotment will be based on utilization of funds.

• Is there any load charged on switching?

  A switch has the effect of redemption (based on the redemption price on the business day of acceptance of switching request) from one scheme/plan/option and the net proceeds will be invested in the other scheme(s) at the prevailing Purchase Price for units as purchase in the other scheme/plan/option to which the switching has been done. However, the differential applicable Entry Load will be payable. (The entry load, of the scheme into which the investor is switching in to will be reduced by Entry and/or Exit Load already paid by the investor in the scheme he/she is switching out from as per the provisions in the Offer Documents of the relevant/respective schemes.)

• How does an NRI investor redeem his/her funds?

  In order to redeem funds the investor needs to submit the redemption request in original at the nearest official point of acceptance of transactions. All the redemption request forms must contain the investor's folio number, the amount/name of the schemes/unit he/she would like to redeem and should be duly signed by the unit holders on record or their Power Of Attorney (POA) holders. Redemption requests that lack valid signatures will not be accepted. In case the investor has an I-pin, he/she may request for redemption online by logging on to www.principalindia.com

• How will the redemption proceeds be paid?

  Redemption proceeds will be paid by a payable at par cheque and payments will be made in favour of the first unitholder and the bank account number shall be mentioned on the cheque as well. Direct credit facility is provided if the investor holds a bank account with any of the authorised banks. Redemption proceeds and/or income distribution (if any) will be payable in Indian rupees only. The scheme will not be liable for any loss on account of exchange fluctuations, while converting the rupee amount to any other currency.

• Is the Income/Dividend on mutual fund units repatriable?

  The entire income/dividend received on investment will qualify for full repatriation provided the member continues to be a Non-Resident Indian in terms of [Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000]

• Does Principal Mutual Fund currently do a transfer to the overseas account?

  No. Investors need to contact their authorized dealers/banks for the same.

• Can a Power of Attorney (POA) holder invest on behalf of the NRI investor?

  Yes. In a mutual fund the POA holder has the authority to invest on behalf of the investor and sign documents for initial and additional purchases as well as request for redeeming units from the account. While applying for purchase of units the POA holder needs to submit the original POA or an attested copy duly notarized. The POA should contain the signature of both the NRI investor and the POA holder. Only then the POA is registered and the POA holder has the right to transact on behalf of the NRI investor. The POA holder's signature will be verified before and for processing any transaction/request.

  • Attestation of the photocopy of the POA can be done by :
  • The Notary himself or
  • The Branch Manager of the bank where the NRI has his NRE/NRO Bank account. The name and the designation/code of the Bank Manager should be clearly mentioned.
  • The Branch Manager of Principal Mutual Fund post verification with the original.

  POA should contain a clause empowering the POA holder to invest in securities on behalf of the NRI. Please note that a POA holder cannot nominate on behalf of the NRI.

• Is nomination by NRIs allowed in the schemes of Principal Mutual Fund (PMF)?

  Yes.

• Can a resident Indian have an NRI as nominee?

  Yes. An NRI can be a nominee subject to the RBI Exchange Control Regulations from time to time.

• Can an NRI have a joint account in a scheme of Principal Mutual Fund with a resident Indian?

  Yes. An NRI investor can have a joint holding with a Resident Indian or a Non-Resident Indian in a scheme of Principal Mutual Fund.

• How does an NRI get updated on the performance of the schemes?

  The NRI investor can log on to www.principalindia.com and receive all the information on performance, portfolio, and returns of all schemes of Principal Mutual Fund. Investors can receive daily NAVs of the schemes of Principal Mutual Fund through email by subscribing to the facility on the website. Apart from the website the investor can also gather information as well as comparison with other mutual fund schemes on some of the financial websites. Apart from these, the AMC sends the fact sheet (Fundamentals) on a regular basis, which contains details like portfolio and performance for a given period.
  Only for Non-Resident Indians.
  For more information contact your financial advisor.

  Principal Mutual Funds and Taxes

• What is the tax liability on receipt of income distributed on mutual fund units?

  As per Section 10(33) of the Income Tax Act, 1961 ("Act") income received in respect of units of a mutual fund specified under Section 10(23D) is exempt from income tax in India and the mutual funds are subject to paying distribution tax in debt-oriented schemes. Hence all the dividends are tax-free in the hands of Non-Resident Investors and no Tax Deduction at Source (TDS) is applicable on the same.

• What is the tax liability on redemptions? What is the rate of Tax Deduction at Source for NRIs/Persons of Indian Origin (PIOs)? What is the tax-rate on capital gains for NRIs/PIOs?

  Under Section 2(42A) of the Income Tax Act, units of the scheme held as a capital asset, for a period of more than twelve months immediately preceding the date of transfer, will be treated as a long-term capital asset for the computation of capital gains - thus attracting long-term capital gains tax rate. In all other cases it would be treated as a short-term capital asset and would attract short-term capital gains tax rate. Hence depending on the period of investments, long-term or short-term capital gains and tax thereon are applicable on redemptions.

  Type of Schemes	Nature of Income	Rate
  Equity-oriented Schemes	Short-term capital gains Long- term capital gains	Capital gains tax at 10%* (applicable to all investors including Foreign Institutional Investors) No capital gains tax payable by any investor.
  Other Schemes	Short-term capital gains Long- term capital gains	In case of FIIs, 30%* In case of other, taxed at normal tax rates (as explained in Note 1). In case of FIIs, 10%* (without indexation) o In case of others, 20%* (with indexation) or, 10%* (without indexation), whichever is less.

  *Education Cess of 2% and a Surcharge of 10% (wherever applicable) would be added to the above rates.

• Is there any tax liability on switching from one option to the other?

  Yes. On switching from one option to the other option, the investor is liable to capital gains tax and TDS at the applicable tax rate.

• Is Securities Transaction Tax applicable to NRI investors?

  Yes.

  Sr.No.	Taxable Security Transaction	Rate
  1	Purchase of an equity share in a company or a unit of an equity oriented fund, where (a) the transaction of such purchase is entered into in a recognized stock exchange; and (b) the contract for the purchase of such share or unit is settled by the actual delivery or transfer of such share or unit	0.125%
  2	Sale of an equity share in a company or a unit of an equity oriented fund, where (a) the transaction of such sale is entered into in a recognized stock exchange; and (b) the contract for the sale of such share or unit is settled by the actual delivery or transfer of such share or unit	0.125%
  3	Sale of a derivative, where the transaction of such sale is entered into in a recognized stock exchange	0.017%
  4	Sale of unit of an equity oriented fund to the Mutual Fund	0.25%

• Where can an investor get the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 and Schedule 5 thereof?

  Investors can visit Reserve Bank of India's (RBI) website http://www.rbi.org.in for all the details.

• What is the proof for Tax Deduction at Source?
  A TDS certificate is issued in the name of the investor mentioning the details of the transaction and the tax deducted. The TDS certificate is commonly known as Form16 A.
• When will the TDS certificate be issued?

  A TDS Certificate in Form 16A is dispatched in the month following the redemption date to the registered address of the investor. To obtain a duplicate TDS certificate, an investor can write a letter to the Registrar or the Asset Management Company quoting the folio number requesting for a duplicate TDS Certificate.

• Is the indexation benefit available to NRIs?

  Yes, in case the units are held for more than twelve months i.e. on long-term capital gains for debt schemes only.

• Are mutual fund units chargeable to Wealth Tax?

  No. Units issued to investors (including NRIs) etc. are not treated as assets as defined under section 2(ea) of the Wealth-Tax Act, 1957 and hence are not liable to wealth tax.

  General Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any investment in securities, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. The Mutual Fund is not guaranteeing or assuring any dividend/bonus. The Mutual Fund is also not assuring that it will make periodical dividend/bonus distributions, though it has every intention of doing so. All dividend/bonus distributions are subject to the availability of distributable surplus in the Scheme. For scheme specific risk factors, please refer to the provisions of the Offer Document. Please read the Offer Document carefully before investing.

  Only for Non-Resident Indians.
  For more information contact your financial advisor.

  Online Transactions

Transact Online. It's really simple.

It's time you experienced the ease and convenience of transacting online. You can now purchase, redeem or switch your units of Principal Mutual Fund schemes at www.principalindia.com. You can also check your account statement, fill in and submit the application form as well as view and download Offer Documents. You can do all this from the comfort of your home or office. Here is a simple step-by-step online transaction guide that will help you get started.

A net of safety

Our online transaction services use Secure Sockets Layer (SSL) technology, which is an effective protocol for sending confidential information securely over the Internet, to ensure that the information transmitted between you and Principal Mutual Fund across the Internet is safe and secure. This Digital Security Certificate is obtained from Verisign and has a 128-bit encryption level. Apart from this Principal Mutual Fund employs further security measures for online transaction investors, which ensures:

• Secured Fund transfers between the Payment Gateway and the Principal Mutual Fund website
• PIN verification for every transaction
• 128-bit secured service from Verisign

Registration

Registration for the 'Transact Online' service is quite simple.

Step 1: You need to first create a 'Username' and 'Password' as a one-time exercise.
Please note: Only the First Unit Holder is allowed to create Username and Password.

Step 2: You need to apply for a Personal Identification Number (PIN) against your folio number by filling in the Registration form-cum- PIN Agreement (You can download the Registration form-cum- PIN Agreement from www.principalindia.com). A separate PIN is issued against each folio number.

Please read the PIN agreement, sign and return it to our Corporate Office at:

Principal PNB Asset Management Company Pvt. Ltd.
Exchange Plaza, 2nd Floor
National Stock Exchange Building
Bandra Kurla Complex
Bandra East
Mumbai - 400 051
India.

On receiving your signed PIN agreement, we will conduct the necessary signature verification and mail your PIN to your registered address within 7 working days.

Step 3: On receiving your PIN, you need to map your folio number to the Username. You can map your multiple folio numbers to a single Username by just clicking on 'My Profile' and then clicking the 'Associate Folio' button. You also need to apply for, and obtain a PIN for each additional folio number. You will need to repeat the above process for every additional folio number. Once you have mapped all your folios to the above mentioned Username, you can access your Principal Mutual Fund Online account anytime with just your Username and Password i.e. you do not need to remember your multiple Folio Numbers.