Who is a non-resident Indian (NRI)?
Non-Resident Indian (NRI) means a "person resident outside India" who is a citizen
of India or is a person of Indian origin [as per FEMA regulations]
Can NRI invests in shares in India through a stock exchange?
Yes, NRI can purchase shares or convertible debenture of an Indian Company through
stock exchanges, under the portfolio investment scheme on repatriation and /or non
- Dated Government securities (other
than bearer securities) or treasury bills.
- Units of domestic mutual funds.
- Bonds issued by a public sector undertaking
(PSU) in India.
- Shares in Public Sector Enterprises
being disinvested by the Government of India.
Are NRIs allowed to invest in Exchange Traded Funds (ETFs)?
Yes, NRIs are allowed to Invest in Exchange Traded Funds (ETFs). NRIs can invest
in ETFs both on repatriation as well as non repatriation basis.
How can NRIs invest in shares in India?
As per Reserve Bank of India (RBI) guidelines, NRI who wishes to invest in shares
in India through a stock exchange need to approach the designated branch of any
authorized dealer (bank) authorized by reserve bank to administer the PIS (Portfolio
Investment Scheme) to open a NRE (Non Resident External) /NRO (Non Resident Ordinary)
account under the scheme for routing Investments.
What is a designated bank branch?
Reserve bank of India has authorized few branches of each authorized dealer bank
to conduct the business under portfolio investment scheme on behalf of NRIs. NRI
can select only one authorized dealer bank for the purpose of investments under
portfolio investment scheme and route the transactions through the branch designated
by the authorized dealer bank.
What is a Portfolio Investment Scheme (PIS)?
Portfolio Investment Scheme (PIS) is a scheme of reserve bank of India under which
- Non Resident Indian (NRIs) can purchase/sell shares/convertible debentures of
Indian companies on Stock Exchanges under Portfolio Investment Scheme. For this
purpose, the NRI/PIO has to apply to a designated branch of a bank, which deals
in Portfolio Investment. All sale/purchase transactions are to be routed through
the designated branch.
Who is a person of Indian Origin?
- He/she at any time, held an Indian
- He/she or either of his parents for
any of his grand parents was a citizen of India by virtue of the constitution of
India or Citizenship Act, 1955 (57 of 1995); or
- The person is a spouse of an Indian
citizen or a person referred to in clause (a) or (b)
Who is an overseas citizen of India (OCI)?
Under OCI Scheme operational from 02nd Dec 2005 government of India decided to grant
overseas citizenship of India (OCI) commonly known as "dual citizenship". A foreign
national, who was eligible to become a citizen of India on 26.01.1950 or was a citizen
of India on or at any time after 26.01.1950 or belonged to a territory that became
part of India after 15.08.1947 and his/her children and grand children, provided
his/her country of citizenship allows dual citizenship in some form or other under
the local laws, is eligible for registration as an Overseas Citizen of India (OCI).
Minor children of such person are also eligible for OCI. However, if the applicant
had ever been a citizen of Pakistan or Bangladesh, he/she will not be eligible for
Can PIO (Person of Indian Origin) as well as OCI (Overseas Citizen
of India) also invest in shares in India?
Yes, PIOs and OCIs do have a parity with NRIs in respect of all facilities available
to the NRIs in the economic, financial and educational fields except in matters
relating to the acquisition of agricultural/ plantation properties.
What are the documents required to be collected from Investor to
open a NRI/PIO/OCI trading account?
List of documents to be taken while registering NRI/PIO/OCI Clients as may be applicable
- Document ensuring status of entity
- In case of Indian passport - Valid
passport, Place of birth as India, Valid Visa - Work/Student/employment/resident
- In case of foreign passport : Valid
passport and any of the following
- Place of Birth as India in foreign
- Copy of PIO / OCI Card as applicable
in case of PIO/OCI - PIS Permission Letter from the respective designated bank .
- PAN Card
- Overseas Address Driving License/ Foreign
passport /Utility Bills/Bank statement (not more than 2 months old).
- Photograph of Investor.
- Proof of respective bank accounts &
What are other client registration formalities to be taken care
while registering NRI/PIO/OCI Clients?
In case of NRI/PIO/OCI client registration documents are required to be executed
by client himself and not by Power of Attorney Holder. In case of In-person verification
of such clients, the members may obtain from such clients KYC documents attested
by any one of the following entities - Indian Embassy/Consulate general in the country
where the client resides, Notary Public, Court, Magistrate, Judge or Local banker.
Is it mandatory for a client to provide local (Indian) address?
At the time of client registration, client needs to provide its foreign address
along with documentary proof of the same. If client so desire it can keep its local
address as correspondence address. In such scenario additionally they are required
to provide documentary evidence in support of local address also.
Can two separate trading accounts namely (NRE & NRO) can be opened
Yes, clients can have two separate trading accounts based on NRE & NRO. Currently
at CWA we have a provision of opening either NRE (or) NRO account only and client
cannot open both NRE and NRO accounts with us
What precautions trading member needs to take while dealing with
Trading member need to ensure that
- Securities are not in RBI ban list
before executing the order.
- Clear funds are available for purchases.
- Securities are available before executing
any sell order.
- Depending upon whether the purchases
are made on repatriation / non-repatriation basis pay-out of the securities needs
to be transferred to respective de-mat account.
- Purchase/Sale transactions in cash
segment should be settled by delivery only.
Is there any ceiling on the Investments under the Portfolio Investment
NRIs are allowed to invest in shares of listed Indian companies in recognized Stock
Exchanges under the PIS.
- NRIs can invest through designated
ADs, on repatriation and non repatriation basis under PIS route up to 5 per cent
of the paid- up capital / paid-up value of each series of debentures of listed Indian
- The aggregate paid-up value of shares
/ convertible debentures purchased by all NRIs cannot exceed 10 per cent of the
paid-up capital of the company / paid-up value of each series of debentures of the
- The aggregate ceiling of 10 per cent
can be raised to 24 per cent, if the General Body of the Indian company passes a
special resolution to that effect.
How payments could be made by NRIs for shares purchased on stock
Payment for purchase of shares and/or debentures on repatriation basis has to be
made by way of inward remittance of foreign exchange through normal banking channels
or out of funds held in NRE/FCNR(B) account maintained in India. If the shares are
purchased on non-repatriation basis, the NRIs can also utilize their funds in NRO
account in addition to the above.
How NRIs/PIO can remit Sale proceeds?
In case of NRI/PIO, if the shares sold were held on repatriation basis, the sale
proceeds (net of taxes) may be credited to his linked NRE /FCNR(B)/NRO accounts
of the NRI/PIO, whereas sale proceeds of non repatriable investment can be credited
only to linked NRO accounts
Can an NRI transfer shares purchased under PIS to others under private
Shares purchased under PIS on stock exchange shall be sold on stock exchange only.
Such Shares cannot be transferred by way of sale under private arrangement or by
way of gift (except by NRIs to their relatives as defined in Section 6 of Companies
Act, 1956 or to a charitable trust duly registered under the laws in India) to a
person resident in India or outside India without prior approval of the Reserve
Can an NRI purchase securities by subscribing to public issue? What
are the permissions/approvals required? How can those shares be sold?
Yes. The issuing company may issue shares to NRI on the basis of specific or general
permission from GOI/RBI. Therefore, individual NRI need not obtain any permission.
While seeking the credit of sale proceeds to NRE/NRO account, the designated bank
should be provided with the details regarding date of allotment and cost of acquisition
to calculate the taxes, if any.
Can NRI do Intra-day transactions in cash segment?
No, NRI Investor has to take delivery of shares purchased and give delivery of shares
sold. Short Selling is not permitted.
Can NRI trade in futures & options segment of the Exchange?
Yes, NRIs are allowed to invest in futures & options segment of the exchange out
of Rupee funds held in India on non repatriation basis, subject to the limits prescribed
Can NRI trade in Currency derivative segment of the Exchange?
No, Only "a person resident in India" as defined in section 2(v) of FEMA Act 1999
are allowed to participate in currency derivative segment of the Exchange.
Can trading account be opened for person's resident outside India
who had been allotted shares under ESOP scheme?
Listed Indian companies are allowed to issue shares under the Employees Stock Option
Scheme (ESOPs), to its employees or employees of its joint venture or wholly owned
subsidiary abroad who are resident outside India, other than to the citizens of
Pakistan. Trading account can be opened for person's resident outside India only
for the sole objective of selling of shares acquired under ESOP Scheme.
Can rights/bonus shares be issued to NRI?
FEMA provisions allow Indian companies to issue Rights / Bonus shares to existing
non-resident shareholders, subject to adherence to sectoral cap as may be applicable
What needs to be done by NRIs for trading in Futures & Options segment
of the Exchange?
An NRI, who wishes to trade on the F&O segment of the exchange, is required to approach
the exchange through a clearing member, through whom the NRI would like to clear
his trades for allotment of custodial participant (CP) code. Clearing corporation
would assign a CP code to each NRI, based on the application received from the clearing
member of the NRI. Trading members should ensure that at the time of order entry
CP Code of the NRI is placed in the CP Code field of the trading system. The NRI
client shall have only one clearing member at any given point of Time.
What are the limits applicable to NRI in Exchange Traded Derivative
Position limits would be applicable on the combined position in all derivative contracts
on an underlying stock at an Exchange. Position limits for NRIs shall be same as
the client level position limits specified by SEBI from time to time. For Index
based contracts - Disclosure requirement for any persons or persons acting in concert
who together own 15% or more of the open interest of all derivative contracts on
a particular underlying Index. For Stock option and single stock futures contracts
- The gross open position across all the derivative contracts for a security for
each specific client shall not exceed higher of:
1. 1% of the free float market capitalization (in terms of number of shares) OR
2. 5% of the open interest in all derivative contracts in the same underlying stock
(in terms of number of shares)
How Investment positions of NRIs are monitored?
Reserve Bank monitors the investment position of NRIs/FIIs in listed Indian companies,
reported by designated banks, on a daily basis. When the total holdings of NRIs/FIIs
under the Scheme reaches the limit of 2 percent below the sectoral cap, Reserve
Bank will issue a notice (caution list) to all designated branches of designated
banks cautioning that any further purchases of shares of the particular Indian company
will require prior approval of the Reserve Bank. Once the shareholding by NRIs/FIIs
reaches the overall ceiling / sectoral cap /statutory limit, the Reserve Bank places
the company in the Ban List. Once a company is placed in the Ban List, no NRI can
purchase the shares of the company under the Portfolio Investment Scheme. List of
caution/banned RBI scrip is available at http://www.rbi.org.in/scripts/BS_FiiUSer.aspx
In case a person who is resident in India becomes a non-resident,
will he/she be required to change the status of his/her holding from Resident to
As per section 6(5) of FEMA, NRI can continue to hold the securities which he/she
had purchased as a resident Indian, even after he/she has become a non resident
Indian, on a non-repatriable basis.
In case a non-resident Indian becomes a resident in India, will
he/she be required to change the status of his/her holding from Non- Resident to
Yes. It is the responsibility of the NRI to inform the change of status to the designated
authorized dealer branch, through which the investor had made the investments in
Portfolio Investment Scheme and the DP with whom he/she has opened the demat account.
Subsequently, a new demat account in the resident status will have to be opened,
securities should be transferred from the NRI demat account to resident account
and then close the NRI demat account.
In case a non-resident Indian becomes a resident in India or vice
versa, will he/she be required to open a new trading account?
Yes, Trading member needs to open a new trading account which needs to be uploaded
with the new category code as may be applicable.