Portfolio Investment Scheme for NRI (PIS) allows NRIs to invest in shares of Indian companies, in the secondary market, under repatriation or non-repatriation basis in respect of shares or convertible debentures sold or purchased through a registered stockbroker on a recognized stock exchange. Here are details of NRI PIS Account.

This facility is called PIS or PINS for NRIs in media & public. It stands for Portfolio Investment Scheme for NRI or simply PIS for NRIs.

PIS is a facility defined under FEMA 2003 Schedule 3 by RBI.

To avail NRI PIS Account, NRIs can approach, any bank, authorized by RBI for administering the Portfolio Investment Scheme, for granting permission to open NRE/NRO account under PIS.

NRI can invest in Indian Equity Markets via two routes

Some Clarity before We Learn Portfolio Investment Scheme for NRI

To make it clear –

NRI, when he becomes a resident, has to close his Resident DEMAT accounts. This is just like what you do with bank accounts. NRIs cannot have a Resident Bank or DEMAT a/c once you attain NR status. This is clear instructions by RBI.

In case you are already investing in shares before becoming NRI, these shares will be credited to NRO DEMAT account. These shares can be sold in secondary market without PIS permission. The sale proceeds can be credited to NRO SB account after payment of capital gain taxes.

NRI can receive shares in inheritance. RBI permission is not required to sell. These shares will be held on a non-repatriable basis (NRO Demat).

PIS does not mean only buying & selling of Shares. NRIs also can buy/sell Bonds, Government Securities & invest in IPOs using PIS approval.

For MFs, you do not need PIS or DEMAT. However demat account is optional in case you want to have MF units in electronic form.

Portfolio Investment Scheme for NRI –  On Repatriation basis (PIS – NRE)

The investment on repatriation basis has to be made by way of funds from inward remittance of foreign exchange through normal banking channels or out of funds held in NRE/FCNR account maintained in India.

Portfolio Investment Scheme for NRI – On Non-repatriation basis (PIS – NRO)

The investment shares on a non-repatriation basis, can additionally be made by utilizing funds in NRO account.

Opening of NRI PIS Account

NRI should open separate PIS account (NRE/NRO) for the purpose of investments in secondary market on repatriation & non-repatriation basis respectively apart from maintaining savings NRE/NRO account.

NRI can have any number of trading or demat accounts . But they can only have 1 PIS account which is linked to these trading/demat account. So all money comes and goes from 1 PIs account to facilitate tracking by authorities.

NRI to authorize the Bank to debit their account under NRE/NRO for transfer of funds to their PIS account as and when required, towards purchase or sell of shares through secondary market. The account is also used for recovery of Bank charges etc. Bank will issue Pay Order/Draft in favour of the Broker authorized by NRI, based on the contract note submitted by them to the debit of PIS account.

Restrictions on Investments in Direct Equity or Shares by NRIs

NRIs can invest on repatriation and non-repatriation basis under Portfolio Investment Scheme for NRI (PIS) route upto 5% of the paid-up capital / paid-up value of each series of debentures of listed Indian companies, within overall permissible limits, subject to compliance of RBI guidelines, which may change from time to time.

The NRI investor has to take delivery of the shares purchased and give delivery of shares sold. Intraday transactions are not allowed under PIS.

Also, short selling (selling without having shares in DEMAT) is not allowed to NRI investors.

NRIs are allowed to invest in F&O (Futures & Options or Derivative Segment) with some conditions.

Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under a private arrangement or by way of gift to a person resident in India or outside India without prior approval of RBI.

Is NRI PIS Account mandatory for NRIs?

Before we answer this, we have to understand why separate approval is required. RBI & government are interested in knowing how much funds from abroad are coming and getting invested in Indian Capital Markets.

Hence PIS NRO is not mandatory to open. Transactions through PIS NRO are also not reported to RBI by the PIS issuer bank.

PIS NRO will be managed using the NRO account and NRO account has income generated in India from domestic sources only.

For transactions under the NRE account, NRE PIS is mandatory to enable regulatory bodies to track funds & information.

Procedure & Documents for opening of Portfolio Investment Scheme Account

Documents required for opening of PIS account:

PIS (NRE) Account
(1) Application for PIS ; (2) Letter of Authority for operating the account ; (3) Acceptance of Fee Schedule for PIS (4) Form RPI (with Repatriation benefits) ; (5) Annexure-I (For shares purchased through Primary Market as NRI on Repatriable basis) ; (6) Nomination Form ‘DA-1’.

PIS (NRO) Account
(1) Application for PIS ; (2) Letter of Authority for operating the account ; (3) Acceptance of Fee Schedule for PIS (4) Form NPI (without Repatriation benefits) ; (5) Annexure-II (Shares purchased as NRI through Primary Market on non-repatriation basis) ; (6) Annexure-III (Shares purchased through Primary/Secondary Market during resident status/received in inheritance) ; (7) Nomination Form ‘DA-1’.

NRI to provide copy of Power of Attorney given to the Registered Broker for undertaking sale/purchase of shares on his behalf to the designated Branch.

Issue of Authorisation Letter
After completion of formalities & opening of PIS account, Bank Branch will issue a letter to the NRI conveying permission of the Bank to undertake Sale / Purchase of shares from the secondary market under PIS through a Broker registered with Stock Exchange. Branch will allot an authorization No. in the letter i.e. Name of Branch/code allotted by RBI for PIS/Sr.No./Year (e.g. ECE House/4402/1/ 2008).

TDS under NRI PIS Account

The applicable TDS will be deducted by PIS issuing bank. The sale proceeds net of taxes will be credited to the Portfolio Investment Scheme for NRI account after receipt of funds from the Broker.

Any question – feel free to drop an email on madhupam at the rate thewealthwisher dot com or use the comments section below.

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