After HSBC Securities and Capital Markets (India) Private Limited (HSCI) fully acquired L&T Investment Management Limited (LTIM), a wholly owned subsidiary of L&T Housing Finance, Non Resident Indians (NRIs) and Persons of Indian Origin (PIO) residing in the US and Canada can no longer be able to invest in the erstwhile L&T schemes that have got transferred to HSBC.
“Though acquisition or consolidation is not new in the Indian Asset Management space, this will pinch the NRIs from US and Canada who used to invest in L&T Mutual Funds,” said Mudit Vijayvergiya, Founder, SBNRI.
Talking on why US and Canada NRIs face certain restrictions while investing in Mutual Funds in India, Vijayvergiya said, “Because, US enacted Foreign Account Tax Compliance Act (FATCA) in 2010 to prevent tax evasion from income generated from overseas (outside national borders). This made it mandatory for all financial institutions to share transaction details involving US Citizens and NRIs. India entered into a mutual agreement with the US in 2015. After this, to be compliant, AMCs must share details of their US/ Canada clients and transaction details with Govt. of India which are further shared with US or Canadian Govt. For Asset Management Companies (AMCs), it resulted in additional complications and therefore many chose to skip offering their services to NRIs from US and Canada.”
While HSBC doesn’t allow the residents of the US and Canada to invest in its MF schemes, some other AMCs do allow the residents of the two countries to invest in their schemes.
Vijayvergiya provides a list of renowned AMCs (not an exhaustive list) that allow NRIs from US and Canada invest in their MF schemes:
- Nippon India Mutual Fund
- NAVI Mutual Fund
- UTI Mutual Fund
- Quant Mutual Fund
- HDFC Mutual Fund
- PPFAS Mutual Fund (Parag Parikh)
- Aditya Birla Sun Life Mutual Fund
“At the time of transaction, users need to share either digital or physical declarations as prescribed by respective AMCs,” said Vijayvergiya.
“This acquisition would result in movement of new MF investments to AMCs which are still serving NRIs from US, Canada,” he added.