Can an NRE account invest in mutual funds?

Yes, an NRE (Non-Resident External) account can be used to invest in mutual funds in India.

Investments in mutual funds do not require a PIS approval thus an NRI can use either NRE or NRO account for mutual fund investments. The key difference between usage of NRE and NRO accounts is that the funds in NRE account can be repatriated easily while funds in NRO account cannot be easily repatriated and is subject to restrictions.

NRIs can invest in mutual funds either by themselves or through a power of attorney where another person can invest on behalf of the NRI. Refer NRI Investment in Mutual Funds for more details.