Portfolio Investment Scheme (PIS) for NRIs
Portfolio Investment Scheme (PIS) is a scheme that enables NRIs, PIOs and OCIs to purchase and sell shares and convertible debentures of Indian companies. The scheme is approved by the Reserve bank of India. NRIs and PIOs can carry out their transactions on a recognized stock exchange by routing such purchase/sale transactions through their NRI Savings Account with a designated bank branch. However, a customer is permitted to maintain only one PIS account at a time for all his transactions.
How can an NRI open PIS account?
NRIs and PIOs will be required to open a PIS account with the designated branch of their bank. This account is basically an NRI savings bank account and the transactions through this account will be normally restricted for that connected to purchase and sale of shares and convertible debentures. (Fund transfer from /to the other NRI account of the customer will be carried out by the bank as per the request of customer) . This NRI PIS account will be linked to a demat account (DP account) for keeping shares and trading account for transacting trades in stock exchanges. Almost all banks in India have tie up with established market players for facilitating opening of DP accounts and Trading accounts. Majority of bank have their own DP services. Major banks have subsidiaries extending trading facility too. Hence, NRIs can contact their own bank and the bank will co-ordinate other PIS related aspects for the customer.
For opening of NRI PIS account, DP account and Trading account, the customer must complete Know Your Customer (KYC) formalities. They will also have to agree to the terms and conditions by signing forms and declarations. The KYC documents include valid passport, valid Visa, local address proof, PAN card, photographs etc.
Once the opening of PIS account, DP account and Trading account are completed, NRIs and PIOs can purchase and sell equity shares and convertible debentures from secondary market.
What are the ceilings on the Investments under the Portfolio Investment Scheme?
NRIs are allowed to invest in shares of listed Indian companies subject to the following conditions:
a. 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 companies.
b. 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 company.
c. 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.
These aspects will be taken care of automatically through this arrangement without intervention by the investor.
What are the features of Portfolio Investment Scheme (PIS)?
a. An NRI acquire required permission for investing into equity and debentures on a repatriable basis by opening a PIS account.
b. Debit related to purchase transactions and credit related to sale transactions are automatically routed through the PIS account.
c. Details of transactions, TDS, Capital Gain, account statement etc are sent on daily basis to the registered e-mail ID of the customer.
d. Nomination facility is available for PIS account and DP account. The balance in the PIS account with bank also gains interest as applicable to NRI SB account.
e. Customer have the freedom to choose trading account and DP account from the group of partners with which the Bank has arrangements.
f. Online view facility for the DP account and PIS account.
Charges for various transactions, minimum balance requirement etc may vary among banks.
