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Portfolio Investment Scheme (PIS) for NRI in India – Ultimate Guide

NRIs are not very familiar with Portfolio Investment Scheme or PIS account so we have tried to reply to all possible questions regarding PIS scheme in this post…

When an Indian becomes an NRI, the domestic bank accounts, Demat accounts, and trading accounts are to be closed or status to be changed if allowed.

So how do NRIs participate in the Indian market? How do they invest in stocks and bonds?

NRIs can use the Portfolio Investment Scheme by RBI. Read on to know everything about PIS –

All About The Portfolio Investment Scheme (PIS)

Must Read: Why NRI Invest in India

What is Portfolio Investment Scheme in India?

Portfolio Investment Scheme (PIS) is an account that can be opened by NRIs to buy and sell shares, debentures and bonds issued by PSUs in the Indian stock market. NRIs can apply for IPOs through the PIS as well. It is a scheme initiated by RBI.

How Do I Open a PIS Account?

The NRI has to apply to a designated branch of a bank, which deals in Portfolio Investment. All transactions will be routed through this branch.

The NRI will need an NRO or NRE savings account and a PIS account to manage his transactions.

The NRE Savings Account is for investments made out of money repatriated. The NRO account is for investments to be made on a non-repatriation basis.

Submit the PIS application form to the bank with the requisite information and documentation to open the PIS account and Demat account.

Is PIS mandatory for NRI?

Yes and No. If your question is about the NRO PIS account – it’s not mandatory to have a portfolio investment scheme for NRI is not mandatory. But in the case of NRE where funds come from outside India & can easily be repatriated – RBI wants banks to track &  report all these transactions.

What are the requirements for a PIS account?

Usually, the requirements for a PIS account are :

  • Identity Proof documentation.
  • Overseas Address Proof documentation.
  • Valid Visa.
  • PAN Card.
  • Photographs of the investor.
  • PIS Permission letter.
  • Form for opening of account.
  • Approval letter from the designated bank where the PIS is opened.
  • Some banks require a minimum amount to be in the PIS account.

There are some charges that have to be paid to open a PIS like account maintenance charges and Approval fees.

How do I use the PIS account?

Once the account is set up and connected to the NRE/NRO savings accounts, you will get your login credentials. You can buy and sell shares, debentures and bonds. Payment can be made through inward remittance of foreign exchange/funds in the NRE account for purchase on repatriation basis or through the NRO account for purchase on non-repatriable basis. On sale, the amount can be credited to the NRE/NRO accounts if the sale is on repatriable basis. If the sale is on non-repatriable basis, the sale proceeds can be only credited to the NRO account.

Check – Best investment options for NRIs in India

Can NRI open Multiple PIS Accounts?

No, RBI allows only one PIS account. If you want to open a new account, you have to close the existing one.

Permitted Credits/ Debits in NRE PIS account? 

Credits

  1. Inward remittances in foreign exchange though normal banking channels;
  2. Transfer from the NRI’s other NRE accounts or FCNR (B) accounts maintained with Authorised Dealer in India;
  3. Net sale proceeds (after payment of applicable taxes) of shares / convertible preference shares /convertible debentures /warrants/ units acquired on repatriation basis under the Scheme and sold on stock exchange through registered broker; and
  4. Dividend or income earned on investment made on repatriation basis under the Scheme

Debits

  1. Outward remittances of dividend or income earned;
  2. Amounts paid on account of purchase of shares /convertible preference shares/ convertible debentures /warrants/ units on repatriation basis on stock exchanges through registered broker under the Scheme; and
  3. Any charges on account of sale / purchase of securities or units under the Scheme.
  4. Remittances outside India or transfer to NRE / FCNR (B) accounts of the account holder of the NRI or any other person eligible to maintain such account.

Source RBI

Are there any restrictions for PIS?

It is important to know the rules of operating the PIS. There are certain restrictions:

  • It cannot be used for day trading. Delivery of instruments is compulsory.
  • Short selling is not allowed in the PIS.
  • For both repatriation and non-repatriation stocks, an NRI can invest only up to 5% of the paid-up capital/paid-up value. The ceiling can be extended to 24% with special permission is acquired wherein t, if the General Body of the Indian company passes a special resolution to that effect.
  • RBI regularly monitors the data and can put an embargo on your bank account if you exceed prescribed limits.
  • NRIs can invest in futures and options of stocks based on certain conditions.

Can it be a joint account?

No, the joint holder is not allowed in the case of PIS.

Can NRI do intraday trading?

No, NRIs are not allowed trading. They can buy stocks & sell only after they got delivery in their accounts.

portfolio investment scheme for nri

Do I require a PIS account for Mutual Funds?

No, you don’t need it for mutual funds. Many people think that a Demat account is required for Mutual Fund investments – actually, even in the case of online purchase it’s not required.

PIS investment account is not required if NRI is selling the stocks which he purchased when he was resident India.

Also Read: Mutual Funds For NRI India

It is important to have a diversified portfolio of investments. India’s growth story is intact and it might be in your interest to make wise investment decisions.

Investment matters are complex, more so if you are an NRI. But managing them is not impossible.

Talk to us about your Investments

If you have any questions on the portfolio investment scheme in India – please add in the comment section.

All About The Portfolio Investment Scheme (PIS)

About the Author

Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning".

  • Shripad Bhadti says:

    Q:Why NRO PIS accounts are prohibited from applying for IPO by a reputed private bank. Any known bank which allows me to invest in IPO with my NRO PIS account?
    Thanks

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