NRI Services

Can an NRI transfer shares purchased under PIS to others under private arrangement?

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 Bank.

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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 NRE /FCNR(B)/NRO accounts of the NRI/PIO, whereas sale proceeds of non Repatriable investment can be credited only to NRO accounts.

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How payments could be made by NRIs for shares purchased on stock exchange?

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.

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Can an NRI transfer shares purchased under PIS to others under private arrangement?

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 Bank.

 

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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.

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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.

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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 by SEBI.

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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 itsemployees 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.

 

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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 of sectoral cap as may be applicable.

 

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What happens if any NRI/PIO purchases shares, which he is not allowed to?

If any NRI purchases shares say of SBI, beyond the limit which he can purchase, then such fresh purchase is invalid and he would be asked to dispose of these shares immediately. Loss if any would be borne by the NRI only.

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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 Non-Resident?

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.

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In case a NRI becomes a resident in India, will he/she be required to change the status of his/her holding from Non- Resident to Resident?

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.

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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.

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Can NRI have multiple PIS with different bank?

No, any NRI or a PIO can have only one PIS account in India. Say for example if he is having a PIS account with X bank and he wants to shift to HDFC Bank, then he has to close the PIS account there and open a PIS account with HDFC Bank.

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Is there any ceiling on the Investments under the Portfolio Investment Scheme?

NRIs are allowed to invest in shares of listed Indian companies in recognized Stock Exchanges under the PIS.

  1. NRIs can invest 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 companies.
  2. The aggregate paid-up value of shares / convertible debentures purchased by all NRIs cannot exceed 10 % of the paid-up capital of the company / paid-up value of each series of debentures of the company.
  3. 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 effec

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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 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.

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Can two separate trading accounts namely (NRE & NRO) be opened by NRI?

Yes, clients can have two separate trading accounts based on NRE & NRO.

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Is it mandatory for a client to provide local (Indian) address?

At the time of client registration, client has to mandatorily provide his foreign address along with documentary proof of the same. If client so desires, he may give his local Indian address as correspondence address. In such scenario, additionally he will be required to provide documentary evidence in support of local address also.

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What are the documents required to be collected from Investor to open a NRI/PIO/OCI trading & demat account?

Following documents are to be collected along with Account Opening Form (AOF) while registering NRI / PIO / OCI Clients

  • One photograph of the applicant
  • Copy of PAN Card
  • Copy of Passport indicating (a) place of birth as India (b) Valid visa –Work / Student/ Employment/ Resident permit
  • Copy of PIO / OCI Card in case of PIO/OCI
  • Proof of both Overseas Address & Correspondence Address (if different) – Copy of any one document –
  • Driving License
  • Passport
  • Utility Bills like Electricity Bill / Landline Telephone Bill (not more than 2 months old)
  • Bank statement (not more than 3 months old)
  • Notarized copy of Rent agreement/ Leave & license agreement / Sale deed
  • Client’s self-declaration that he has complied with & will continue to comply with FEMA regulations and other applicable laws
  • Client’s undertaking with complete Residential Address (other than PO Box address) in case he submits an Overseas Post Office Box address as Correspondence / Permanent address
  • Proof of all Bank Details mentioned on AOF – Bank Statement (not more than 2 months old) indicating the type of account (NRE/NRO/PIS) alongwith cancelled cheque in original
  • PIS permission letter from the respective designated Bank
  • Proof of all Demat Accounts mentioned on AOF (in case account is not with PL-DP)
  • In case of Mariner NRI, Certified copy of CDC (Continuous Discharge Certificate) or Mariner’s Declaration.

Note: Proof of Bank account & Demat account is to be collected in the name of first-holder only in case demat account is being opened with joint-holders

Important points to be taken care :-

  • AOF & documents are required to be signed by client himself and not by any Power of Attorney Holder.
  • All documents collected with AOF must be self-attested by the client
  • Every cancellation / correction / over-writing is authenticated by the client (full signature)
  • If client’s In-person verification & document verification is not possible, then any one of following authorized persons are required to attest their KYC documents
  • Indian Embassy/Consulate General in the country where the client resides
  • Notary Public
  • Court Magistrate / Judge
  • Officials of Overseas branches of Scheduled Commercial Banks registered in India

Note: Please read through the Instructions & Checklist given in the AOF before filling it

 

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How can NRIs invest in shares in India?

As per Reserve Bank of India (RBI) guidelines, NRIs who wish to invest in shares in India through a stock exchange need to have NRE (Non Resident External) /NRO (Non Resident Ordinary)/ PIS (Portfolio Investment scheme) bank account with the designated branch of any authorized dealer (bank) authorized by Reserve Bank.

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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.

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Who is a person of Indian Origin?

For the purposes of investments in shares/securities in India, person of Indian origin means a citizen of any country other than Pakistan or Bangladesh, if

  1. he at any time, held an Indian passport; or
  2. he or either of his parents or any of his grandparents were a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955 (57 of 1995); or
  3. the person is a spouse of an Indian citizen or a person referred to in clause (a) or (b)

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Can PIO (Person of Indian Origin) & OCI (Overseas Citizen of India) invest in shares in India?

Yes, PIOs and OCIs can invest in shares in India.

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What is an Overseas Corporate Body (OCB)?

‘Overseas Corporate Body’ means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Non- Resident Indians directly or indirectly but irrevocably.

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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 investment under portfolio investment scheme and route the transactions through the branch designated by the authorized dealer bank.

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Can NRI invest in shares in India through a stock exchange?

Yes, NRI can purchase shares or convertible debentures of an Indian Company through stock exchanges, under the portfolio investment scheme on repatriation and /or non repatriation basis.

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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]

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Can I change Repatriability status?

For Trading account, you can not change the status since status change at Exchange UCC is not permitted, your existing Trading account shall have to be closed and new account shall have to be opened under new status for which fresh Trading AOF shall have to be submitted.

However, you can change the status in demat account. Wef October 1st, 2017, CDSL is providing a new facility whereby Status & Sub-status of existing demat account can be amended. The client shall have to submit Account Modification Form (AMF) for change of status & sub-status along with other documents.

 

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