MF units held by non-residents in Mauritius, Singapore decline

Mutual Fund (MF) units held by non-residents in Mauritius and Singapore declined after the amendment in double taxation avoidance agreements (DTAA) with them for withdrawal of capital gains exemption in a phased manner, effective April 2017, according to an RBI survey. The survey covers 44 Indian MF companies and their asset management companies (AMCs), which held or acquired foreign assets and/or liabilities during 2018-19 and/or in the preceding year.

"Foreign liabilities of MF companies (USD 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 (USD 0.7 billion) in March 2019 with both foreign liabilities and foreign assets recording increases during 2018-19," it said.

The UAE, the UK and the USA were the largest investors together accounting for one-third of the MF units held by non-residents.


According to the survey, foreign liabilities in units of MF companies at face value in the case of Mauritius declined 43.1 per cent at the end of March 2019 over the previous year.

In the case of Singapore, the decline was 16.6 per cent during the same period.

The survey further said that in the case of asset management companies of non-residents in the UK held over half of the foreign liabilities of AMCs in March 2019.

On the other hand, 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.

Overseas assets of AMCs were largely held in Guernsey, Mauritius and Singapore, according to the 2018-19 round of the survey of foreign liabilities and assets of the MF companies.