Equity investments in India for NRIs/PIOs/OCIs
The above structure is the complete platform for the NRIs/PIOs/ OCIs to invest their money into the Indian capital market.
There are Two basic categories of transaction on basis of repairability.
First, when you want to invest your repatriable funds which is basically your overseas earning and NRE balance, you need to route the investments through the NRE channel (left hand side set up).
Second, when you want to invest your not repatriable money, which is basically your Indian earning and NRO balance, you need to route the investments through the NRO channel ( right hand side set up).
Transactions can also be categorised on basis of the market you are participating into, i.e., primary market (IPOs) and secondary market (already listed stocks).
First, when you are buying mutual funds or IPOs, you need to buy it from the NON PIS/PINS ( regular NRE/NRO account).
Second, when you are buying any stock which is already listed and trading, you need to route the investment through PIS/PINS account ( either NRE or NRO, depending on which fund you want to use ). One point to be noted here; though RBI has discontinued the PIS reporting for non repatriable (NRO money) investments in secondary market (already listed stocks), still most of the bank are continuing with the same voluntarily for their own operational ease and better customer experience.
Wondering what is this PIS/PINS thing all about….??
Well, check this out……
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.
source – NSE
It’s actually a bank account, either repatriable (NRE) or Non-Repatriable (NRO), through which you need to route all your share purchase/ sell transactions (other than IPOs). At the end of every trading day all the banks reports those transaction to RBI. That’s how RBI keeps a track of NRI holdings in any particular stock. Sounds new ? Well….RBI do keep a track of the NRI (FII as well) holdings in each of the stocks. There are prescribed ceiling of NRI holdings in a given stock that has to be maintained mandatorily. Take a look at the link below to know more :
https://www.rbi.org.in/fiilist/index.html
If you are still not clear about how to do your Mutual Fund, IPO and Stock investments using your NRE or NRO funds, take a closer look at the SCENARIO ANALYSIS below :
Still have some questions ??