# PMS, AIF and Private Credit for NRIs: Beyond Mutual Funds What wealthy NRIs do past ₹5 crore: PMS, AIFs, private credit, a deliberate India allocation and a cross-border estate plan, with the risks of each. By Nikhil Varghese, CA · 4 October 2026 · https://finniki.com/blog/nri-pms-aif-private-credit **Quick answer:** Once an NRI's India-linked wealth crosses roughly **₹5 crore**, the question changes from "what should I invest in?" to "has my strategy kept up with my life?" Five tools become relevant: a **Portfolio Management Service (PMS)** for a tailored stock portfolio (SEBI minimum ₹50 lakh), **Alternative Investment Funds (AIFs)** for pre-IPO and private-market access (most set a ₹1 crore minimum), **private credit** that lends to businesses, a **deliberate India allocation**, and a **cross-border estate plan**. Each carries more risk or complexity than a mutual fund, so most wealthy NRIs carve out a slice rather than move everything. And estate planning matters whatever your corpus. [Watch the 18-minute episode: What wealthy NRIs do with ₹5 crore+ (not just mutual funds)](https://youtu.be/xDbiOT3YvfU) *This is education, not personalised advice. NRI rules depend on your citizenship, residency and the exact product: check the specifics with a SEBI-registered adviser and your CA before acting.* ## Why do wealthy NRIs outgrow the usual investment advice? Because the advice was written for someone with far less to protect. Take Ananya, a composite of patterns seen across NRI clients: she sold part of her stake in a Bengaluru services company for **₹9 crore** in 2019, moved to Singapore for a new role, and within months watched nearly 35% of that money disappear. The market was not the problem. She was managing ₹9 crore the same way she had managed her first ₹20 lakh, and nobody had told her the strategy needed to change. There is no fixed number where the switch flips; it also depends on your goals, risk capacity, liquidity needs and how complicated your tax picture already is. But the pattern is clear. While wealth is small, the focus is growing it. As it grows, you have to think about **growth and protection** together, across two currencies and sometimes two or three tax systems. ## Are mutual funds still good for wealthy NRIs? Yes. Most NRIs hold them, and they keep doing the heavy lifting for most of the journey. But they are mass-market products: ₹500 a month and ₹5 crore get the same fund, the same strategy and roughly the same fund-level return before your own fees, timing and taxes. Call it the **bus stop problem**: everyone boards from a different city, but the fund drops you all at the same stop. Past a certain point, NRIs want something closer to a private vehicle, built around their risk appetite, goals and cross-border tax situation. ## What is a PMS, and can an NRI invest in one? A **Portfolio Management Service** is a tailor-made stock portfolio built and managed for you by a professional fund manager, instead of a pooled fund that treats every investor the same way. NRIs can invest. You need: - a **PAN**, - an **NRI demat account**, and - an **NRE or NRO bank account**. Which one, and whether it runs on a repatriation or non-repatriation basis, depends on where your funds come from and how the provider and your bank structure it. An NRE account alone does not guarantee free repatriation later: confirm the structure first. SEBI's regulatory minimum for a PMS is **₹50 lakh**, though providers often set it higher. ![SEBI's minimum for a PMS is ₹50 lakh, and most AIFs ask for at least ₹1 crore.](https://finniki.com/blog/media/80084ce027b76234833a4912.jpg) ## Why choose a PMS over topping up mutual funds? For two reasons: 1. **Control.** You set the mandate instead of following a fund's fixed strategy. 2. **Potential tax efficiency.** Because you hold the stocks directly, you can realise a loss on an individual stock and offset it against a gain elsewhere, which a pooled fund cannot do for you. Say 3 of your 25 PMS stocks are down for the year: you sell them and offset the loss against a gain booked elsewhere, perhaps on an Indian property sale. Whether that saves tax depends on the holding period, the type of gain and your country of residence's rules, so treat it as a conversation with your CA, not a rule. A PMS is often riskier than a mutual fund, and it is not automatically cheaper on tax: fees and turnover cut both ways. Most NRIs carve out a slice rather than moving their whole India corpus. The question to ask a provider is not "what's your strategy?" but **"what's the repatriation basis, and how does loss-offsetting actually work here?"** ## Can NRIs invest in pre-IPO companies through an AIF? Sometimes. Certain private-equity and venture **Alternative Investment Funds**, private placements and pre-IPO platforms give NRIs access to companies before they list, where the fund's mandate and **FEMA** allow it. Most AIFs set a **₹1 crore** minimum. The access is not blanket: - **Sector restrictions** can apply. - **Not every fund accepts every jurisdiction.** US and Canadian NRIs face extra restrictions because of the compliance those countries demand. The first question is not returns but "do you accept NRIs from where I live?" - **A listing is never guaranteed.** Buying unlisted shares yourself is possible but riskier from abroad: if the listing stalls, you are left finding a private buyer from another time zone. A well-run AIF plans exits on your behalf over a typical **five-to-seven-year** tenure, through a secondary sale, a funding-round exit or timing around the IPO. Some diversify across several companies, others concentrate, so check the actual portfolio policy. No exit is guaranteed on any timeline, and a fund can run past its target tenure. This is one of the highest-risk tools here, suited to a small, deliberate slice of a large portfolio. Before you write a cheque, confirm the fund takes NRIs from your country, then ask about portfolio construction and a **realistic, not best-case, exit timeline**. ## What is private credit, and is it safe? It is lending to businesses that skip traditional bank channels, through a private credit AIF, and it is **not as safe as a bank FD**. Banks earn a spread between what it costs them to raise money and what they earn lending it, after credit losses, capital and running costs. Private credit lets an NRI step into something closer to that role, targeting a yield often higher than an FD in rupee terms, though fees, taxes and any defaults can eat into the headline number. Many private credit funds lend through **senior secured debt**, and those two words matter more than the yield: - **Secured** means a real asset (receivables, inventory, sometimes property) is legally pledged against the loan. Enforcing a claim on business assets is rarely as clean or fast as a bank repossessing a car. - **Senior** means priority. If a company defaults or goes into liquidation, senior lenders are paid back ahead of unsecured lenders and shareholders. ![Private credit: senior means you are paid back first, secured means an asset is pledged, and recovery can still take years.](https://finniki.com/blog/media/53abc526e1aa163e939a8c01.jpg) Recovery depends on how the collateral was pledged, what it fetches when sold and how long enforcement takes under Indian insolvency law. Senior secured lenders can still lose money, and recovery can take years. ## How is private credit interest taxed for NRIs? Interest is typically subject to **TDS in India** before it reaches you. Depending on the **DTAA** with your country of residence, you *may* claim credit for it against your local tax; that depends on the income type, the treaty terms, your residency documents and whether your country recognises the credit. Get that answered by your CA before the money leaves your account. See our guide to [DTAA for NRIs](https://finniki.com/blog/dtaa-for-nri). ## How much of an NRI's wealth should stay in India? There is no single number, but it should be a **decision, not an accident**. Many NRIs already carry real exposure to their country of residence through salary, a home and sometimes a retirement account, though a foreign salary alone is not a diversified portfolio. The risk is the opposite drift: India quietly shrinks to an ancestral property and an NRO account you check twice a year. Wealthy NRIs keep a deliberate foothold, partly because Indian markets have delivered strong long-term growth alongside real volatility, and partly because many NRIs eventually return or want that door open. **GIFT City**, India's international financial hub, makes this easier: IFSC-based funds let you invest in your own foreign currency, and for certain products that can mean simpler compliance and specific tax advantages over the domestic route, depending on the product and your own country's rules. Do not assume every GIFT City fund works the same way; our [GIFT City guide for NRIs](https://finniki.com/blog/gift-city-for-nri) covers the details. Pick a **percentage of your net worth** you want in India, and check it once a year. If nobody manages that number, it shrinks by default. ## Why does cross-border estate planning matter more than returns? Because your assets sit across two or three legal systems, and they do not line up. Property in India, a retirement account in the US or UK, savings in the UAE: if something happened to you tomorrow, would your family know where everything is, let alone what to do with it? - **US:** can tax the worldwide estate of a citizen or someone domiciled there; a non-domiciled non-US person is generally exposed only on US-situated assets. - **UK:** the rules turn on domicile, not just residence. - **Canada:** no separate inheritance tax, but on death your assets are generally treated as sold at fair market value (a **deemed disposition**), which can trigger a tax bill. - **India:** currently has **no inheritance or estate tax**. A will drafted in India may not cover assets abroad, and vice versa. Some NRIs use one coordinated will across every jurisdiction, others a separate will per country. Either works, as long as the documents are drafted together so one does not accidentally revoke or contradict another. The fix is cheap by comparison: one structured conversation with someone who does cross-border succession, not a generic template. Read more in [NRI estate planning](https://finniki.com/blog/nri-estate-planning). ## Which of these tools do you actually need? Start from the problem, not the corpus: - Need more **control** over public-market investing? That is a **PMS**. - Comfortable **locking money away** for private-market access? That is an **AIF**. - Understand the **credit risk** behind a higher yield? That is **private credit**. - Is your India exposure **deliberate or accidental**? That is the **allocation** question. - Would your family know what to do with **everything you own**? That is **estate planning**, whatever your corpus. As a rough rule of thumb on top of that, not a regulation: ![A rough corpus guide: under ₹1 crore stick with mutual funds, ₹1 to 5 crore explore a small slice, past ₹5 crore check your strategy has kept up.](https://finniki.com/blog/media/69e1c1cdc83d3fc5bcc3a1f9.jpg) - **Under ₹1 crore:** none of this is your priority yet; keep compounding through simple, well-chosen mutual funds. - **₹1 to 5 crore:** worth exploring a small, intentional slice. - **Past ₹5 crore:** ask whether your portfolio has evolved the way your life has. Corpus is not the full picture: your total net worth, cash flow, liabilities and what you hold in your country of residence matter just as much. ## Three questions to ask yourself 1. Is your portfolio still built for someone with far less to protect, and far less spread across borders, than you have now? 2. If part of your wealth were lost tomorrow to poor planning rather than poor markets, would your family know what to do in every country where you hold something? 3. Are you optimising purely for growth, when what you need now is growth and protection? None of this means abandoning mutual funds. It means that as your wealth crosses borders, your strategy has to cross with it. ## FAQs ### Can NRIs invest in a PMS in India? Yes. You need a PAN, an NRI demat account and an NRE or NRO bank account; SEBI's minimum investment is ₹50 lakh, and providers often ask for more. ### Can NRIs invest in AIFs? Yes, where the fund's mandate and FEMA allow it, but not every fund accepts every country; US and Canadian NRIs face extra restrictions. Most AIFs set a ₹1 crore minimum. ### Is a PMS better than a mutual fund? Not automatically. A PMS gives you control and stock-level loss offsetting, but it is often riskier and fees and turnover can cancel the tax benefit. ### What does senior secured mean in private credit? Senior means you are repaid ahead of unsecured lenders and shareholders; secured means a real asset is legally pledged against the loan. You can still lose money, and recovery can take years. ### Is private credit as safe as a fixed deposit? No. It targets a higher yield because the risk is real, and fees, taxes and defaults can reduce the return. ### Does India have an inheritance tax? No, India currently has no inheritance or estate tax, but the US, UK and Canada each tax estates or deemed disposals in their own way. ### At what corpus should an NRI look beyond mutual funds? As a rough guide, not before ₹1 crore; between ₹1 and 5 crore a small slice is worth exploring, and past ₹5 crore it is worth checking your whole strategy. ## Make your wealth plan cross borders Two countries, two currencies and sometimes three tax systems need one plan. [Book a session](https://finniki.com/book) to review your PMS, AIF, India allocation and estate questions with a CA, or find more episodes on [FinNiki videos](https://finniki.com/videos).