Investment

NRI and Portfolio Investment Scheme

Portfolio Investment Scheme (PIS) allow NRI to purchase and sale of shares/convertible debentures of listed Indian companies on a recognized stock exchange on both repatriable and non-repatriable basis. PIS is a Reserve Bank of India (RBI) designated mandatory route for NRI/PIO and FIIs to invest in secondary stock market in India. The Investments in the Indian stock market shall be routed through a PIS Bank Account (NRE / NRO) opened in any of the designated branch of a Bank for routing such investments.

NRI is permitted to buy or sale shares/convertible debentures through his own broker who is an authorized member of a recognized stock exchange. Both purchase and sale contract notes, in original, should be submitted by the NRI within 24 hours of execution of the contract to his designated branch with whom his PIS account is maintained. The onus is on the NRI for submission of contract notes to the designated branch of the AD bank.

PIS Account can be opened on Repatriable and/or Non-repatriable basis depending upon the source of funds. An NRI can maintain only one PIS Account (one each for repatriable and non-repatriable basis) at a time with any Bank in India. Shares /convertible debentures acquired by the NRI under the Scheme shall not be pledged for giving loan to a third party without prior permission of the Reserve Bank.

Bank’s Role in PIS transactions:

Bank (Authorized Dealer) accords PIS Approval to NRIs’ / PIOs’ on behalf of RBI by issuance of PIS Permission letter.PIS Permission letter shall be issued only to the 1st Applicant in the PIS Application Form. Hence, 2nd or 3rd joint NRI applicant desirous of trading in Indian secondary stock markets needs to apply separately as a 1st applicant and obtain the permission. Bank confirm that shares sought to be acquired is not under Caution/Ban list i.e. within the permissible limits for NRIs’/PIOs.Bank also report the consolidated scrip wise buy/sell transactions to the RBI on a daily basis to enable the RBI to monitor the limits. It is the duty of the Bank to undertake monetary settlement of Buy/ Sell transactions by payment / receipt of funds between the stockbroker and the Customer. Bank also compute Capital Gains Tax (Short/Long Term) and payment of TDS to IT authorities and issue TDS Certificate.

The permissible credits and debits in the NRE (PIS) account for routing PIS transactions will be as under:

Permissible Credits:

  • Inward remittances in foreign exchange though normal banking channels;
  • Transfer from applicant’s other NRE accounts or FCNR (B) accounts maintained with AD bank in India;
  • Net sale proceeds (after payment of applicable taxes) of shares and convertible debentures which were acquired on repatriation basis under PIS and sold on stock exchange through registered broker;
  • Dividend or income earned on investments under PIS.

Permissible Debits:

  • Outward remittances of dividend or income earned;
  • Amounts paid on account of purchase of shares and convertible debentures on non- repatriation basis on stock exchanges through registered broker under PIS; and
  • Any charges on account of sale/ purchase of shares or convertible debentures under PIS.

The permissible credits and debits in the NRO (PIS) account for routing PIS transactions will be as under;

Permissible Credits:

  • Inward remittances in foreign exchange though normal banking channels;
  • Transfer from applicant’s other NRE accounts or FCNR (B) accounts or NRO accounts maintained with AD bank in India;
  • Net sale proceeds ( after payment of applicable taxes) of shares and convertible debentures which were acquired on repatriation (at the NRI’s option) and non repatriation basis under PIS and sold on stock exchange through registered broker; and
  • Dividend or income earned on investments under PIS.

Permissible Debits:

  • Outward remittances of dividend or income earned;
  • Amounts paid on account of purchase of shares and convertible debentures on non- repatriation basis on stock exchanges through registered broker under PIS.
  • Any charges on account of sale/ purchase of shares or convertible debentures under PIS

Want to open a PIS account and invest in Indian equity markets ? write to nri@nrimaster.com

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