Role of Mutual Funds to attract Foreign Capital with reference to NRIs

P. Satya Balaram,
M.Com. MBA, M.Phil, PGDFM.
Associate Professor, Aditya P.G. and Degree Colleges,
LakshmiNarayana Nagar, KAKINADA-533003. Cell: 9000072443.
balaramfinance007@gmail.com.

Abstract
Indian mutual fund has gained a lot of popularity from the past few years. Earlier only UTI enjoyed the
monopoly in this industry but with the passage of time many new players entered the market, due to which the
UTI monopoly breaks down and the industry faces a severe competition. As the time passes this industry has
become a buzz word in the Indian financial system. So it is very important to know the investors perception
about this industry. The present study analyses the mutual fund investments in relation to investors behavior.
Investors opinion and perception has been studied relating to various issues like type of mutual fund scheme,
main objective behind investing in mutual fund scheme, role of financial advisors and brokers, investors
opinion relating to factors that attract them to invest in mutual funds, sources of information, deficiencies in the
services provided by the mutual fund managers, challenges before the Indian mutual fund industry etc.
An Indian citizen or a foreign citizen of Indian origin who has stayed abroad for employment/carrying
out business or vocation for 182 days or more or under circumstances indicating an intention for an unknown
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. NRIs can maintain bank accounts in rupees as well as in foreign currency. However,
accounts in foreign currencies can be maintained with authorized dealers/ banks only.
The three types of rupee accounts permitted, that can be maintained by NRIs are as follows
I. NRE: Non-resident (External) Rupee Accounts,
II.NRO: Non-resident Rupee (Ordinary) Accounts
III.FCNR B: Foreign Currency (Non Resident) Accounts (Banks)
Mutual Funds are dynamic Financial Institutions (FIs) which play a crucial role in an economy
by mobilizing savings and investing them in the capital market, thus establishing a link between
saving and the capital market. In Mutual Funds many investors contribute to form a common pool of money.
This pool of money is invested in accordance with stated objectives. The ownership of the fund is thus joint
or mutual, the fund belongs to all investors. A single investor ownership of the fund is in the same proportion
as the amount of the contribution made by him bears to the total amount of the fund. The Securities & Exchange
Board of India (SEBI) (Mutual Fund) regulations 1993 defines Mutual Funds as, A fund established in the
from of a trust by sponsor, to raise monies by the trustees through the sale of units to the public, under one or
more schemes, for investing in securities in accordance with these regulations. The Association of Mutual
Funds in India (AMFI) defines; Mutual Funds is a trust that pools the savings of a number of investors who
share common financial goal. Anybody with an inventible surplus of as little as a few thousand rupees can
invest in Mutual Funds. These investors buy units of a particular Mutual Fund scheme that has defined
investment objective and strategy.
Keywords: POI, Tax Deductions, NAV, AMFI, SEBI, Liberalisation, Net Cash inflows/Outflows.