Portfolio Investment Scheme (PIS) for NRIs

Portfolio Investment Scheme (PIS) for NRI

According to the FEMA regulation NRIs can make portfolio investment under certain conditions. However OCBs are not allowed to make fresh investments in India under the (PIS) Portfolio Investment Scheme.
Portfolio investment is covered by general permission subject to following condition/provisions.

(i) Investment is allowed both on repatriation as well as non-repatriation basis.

(ii) Under this scheme buying and selling of shares (Preference and Equity) and/or convertible debentures are included

(iii) Purchase and sale of share is allowed via registered broker of a recognized stock exchange.

(iv) NRI must designate one branch and all buying and selling must be routed through that designated bank branch only.

(v) Speculative transactions is prohibited. Transactions of sales and purchase must be delivery based

(vi) Investment mode should be carried out in any of the following ways:

(a) For investment on Repatriation basis

• Inward remittances is allowed through normal banking channels
  






• Investment can be made Out of FCNR/NRE account.
  

(b) For investment on non-repatriation basis

• Inward remittances is allowed through normal banking channels
  






• Investment can be made Out of FCNR/NRE account
  






• Investment can be made out of NRO account
  

(vii) Ceiling on Investment

(a) For every (Per NRI)

• NRI is allowed to invest 5% of the paid-up value of shares of an Indian Company on both repatriation and non-repatriation basis.
  






• He is also allowed to invest upto 5% of the value of each issue of convertible debenture of an Indian Company on both repatriation and non-repatriation basis.
  

(b) For Per investee Company
Total holding by all NRIs put together on both repatriable as well as non-repatriable basis should not exceed:

• 10% of paid-up value of shares of an Indian Company.
  






• 10% of paid-up value each series of convertible debenture.
  






• This ceiling of 10% could be enhance upto 24%, if the General Body of concerned
  






• Indian Company passes a special resolution to that effect.
  

(viii) Repatriation of Sale/Maturity Proceeds
The income from the Investment held on repatriation basis can be credited to NRE/FCNR/NRO account after payment of applicable taxes.
If investment is made on non-repatriation basis then credit of sale/maturity proceeds is permitted in NRO account.

(ix) If the holding of NRIs become less than 60% in existing OCB(i.e. prior to Sep 16, 2003), the existing OCBs must inform the same to the designated bank branch immediately

(x) NRIs can enter into forward contracts to hedge their investment made in India.

(xi) Subject to the limits prescribed by SEBI, NRI is permitted to invest in exchange traded derivatives contracts approved by SEBI from time to time out of his Rupee funds held in India on Non-Repatriable basis.

(xii) NRIs can also invest without limit on repatriable basis in Government dated securities, treasury bills, units of domestic mutual funds, bonds issued by PSUs, shares in public sector enterprises which are being disinvested by Government.

(Xiii) They can also invest without limit on non-repatriable basis in Government dated securities, treasury bills, units of Domestic mutual funds, units of Money market mutual funds. However, NRIs are not permitted to make Investments in Small Savings Schemes including PPF.