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NRIs are not very familiar with Portfolio Investment Scheme or  What is PIS account? So we have tried to reply to all possible questions regarding the PIS scheme in this post…

portfolio investment scheme for NRI

Check – Best investment options for NRIs in India

When an Indian becomes an NRI, this domestic bank, Demat, and trading accounts are to be closed or status to be changed if allowed.

So how do NRIs participate in the Indian market? How do they invest in stocks and bonds?

NRIs can use the Portfolio Investment Scheme by RBI. Read on to know everything about PIS –

What is Portfolio Investment Scheme For NRI In India?

Portfolio Investment Scheme (PIS) is an account that can be opened by NRIs to buy and sell shares, debentures, and bonds issued by PSUs in the Indian stock market. NRIs can apply for IPOs through the PIS as well. It is a scheme initiated by RBI.

Is a Portfolio investment account mandatory for NRI?

Yes, NRIs can invest in equity by opening a PIS account that is associated with an NRE or NRO account. In the case of NRE where funds come from outside India & can easily be repatriated – RBI wants banks to track &  report all these transactions.

Why Do NRIs Need a PIS Account?

NRIs who want to earn good returns from investments in the Indian stock market are advised to open a PIS account offered by the RBI. The only catch for buying and selling Indian company stocks and convertible debentures is that you must operate through a registered broker in the recognized stock exchange. NRIs are authorized to trade freely, barring intra-day transactions.

NRIs get the following benefits with an NRI PIS account:

  • Invest in Indian stock
  • Freely buy and sell stock and repatriate
  • Easy transaction
  • User-Friendly operations

What is Pis account

Must Read: Investment restrictions for NRIs In India

What are the Eligibility Criteria to Open a PIS Account?

NRI and PIO  are eligible to avail of the PIS scheme according to the RBI guidelines.

NRIs cannot open a PIS account, if

  • A resident is traveling abroad for medical treatment

  • Residents traveling abroad on short trips

  • Bangladesh and Pakistan residents without prior RBI permission

  • Nepal and Bhutan residents

  • Mariners employed by Indian shipping companies

What are the documents required for a PIS account?

Usually, the requirements for a PIS are :

  • Identity Proof documentation.
  • Overseas Address Proof documentation.
  • Valid Visa.
  • PAN Card.
  • Photographs of the investor.
  • PIS Permission letter.
  • Form for the opening of an account.
  • Approval letter from the designated bank where the PIS is opened.
  • Some banks require a minimum amount to be in the PIS account.

There are some changes that have to be paid to open a PIS like account maintenance charges and Approval fees.

How Do I Open a PIS account for NRI?

The NRI has to apply to a designated branch of a bank, that deals in Portfolio Investment. All transactions will be routed through this branch.

The NRI will need an NRO or NRE savings and an NRI PIS account to manage his transactions.

The NRE Savings Account is for investments made out of money repatriated. The NRO account is for investments to be made on a non-repatriation basis.

Submit the PIS application form to the bank with the requisite information and documentation to open the PIS and Demat account.

How do I use the PIS account?

Once the account is set up and connected to the NRE/NRO savings accounts, you will get your login credentials. You can buy and sell shares, debentures, and bonds. Payment can be made through inward remittance of foreign exchange/funds in the NRE account for purchase on a repatriation basis or through the NRO account for purchase on a non-repatriable basis. On sale, the amount can be credited to the NRE/NRO accounts if the sale is on a repatriable basis. If the sale is on a non-repatriable basis, the sale proceeds can be only credited to the NRO account.

Also Read: HSBC Report Review

Can NRI open Multiple Portfolio Investment accounts?

No, RBI allows only one PIS account for NRI. If you want to open a new account, you have to close the existing one.

Permitted Credits/ Debits in NRE Portfolio Investment account?

Credits

  1. Inward remittances in foreign exchange though normal banking channels;
  2. Transfer from the NRI’s other NRE  or FCNR (B) accounts maintained with Authorised Dealer in India;
  3. Net sale proceeds (after payment of applicable taxes) of shares / convertible preference shares /convertible debentures /warrants/ units acquired on repatriation basis under the Scheme and sold on stock exchange through registered broker; and
  4. Dividend or income earned on investment made on repatriation basis under the Scheme

Debits

  1. Outward remittances of dividend or income earned;
  2. Amounts paid on account of purchase of shares /convertible preference shares/ convertible debentures /warrants/ units on repatriation basis on stock exchanges through registered broker under the Scheme; and
  3. Any charges on account of sale / purchase of securities or units under the Scheme.
  4. Remittances outside India or transfer to NRE / FCNR (B) accounts of the accounts holder of the NRI or any other person eligible to maintain such account.

Source RBI

Are there any restrictions for the PIS account?

It is important to know the rules of operating the PIS. There are certain restrictions:

  • It cannot be used for day trading. Delivery of instruments is compulsory.
  • Short selling is not allowed in the PIS account for NRI.
  • For both repatriation and non-repatriation stocks, an NRI can invest only up to 5% of the paid-up capital/paid-up value. The ceiling can be extended to 24% with special permission is acquired wherein t, if the General Body of the Indian company passes a special resolution to that effect.
  • RBI regularly monitors the data and can put an embargo on your bank account if you exceed prescribed limits.
  • NRIs can invest in futures and options of stocks based on certain conditions.

Can it be a joint account?

No, the joint holder is not allowed in the case of PIS.

Can NRI do intraday trading?

No, NRIs are not allowed trading. They can buy stocks & sell only after they got delivery in their accounts.

pis account for nri

Must Check – NRI Real Estate Investments Outside India – Pros & Cons

Do I require a PIS account for Mutual Funds?

No, you don’t need it for mutual funds. Many people think that a Demat account is required for Mutual Fund investments – actually, even in the case of online purchase, it’s not required.

A PIS investment account is not required if NRI is selling the stocks which he purchased when he was resident in India.

Some List of Banks in India who offer  PIS account for NRI 

  • ICICI Bank.
  • SBI Bank.
  • Deutsche Bank.
  • Bank of Baroda.
  • Federal Bank.
  • South Indian Bank.
  • HDFC Bank.
  • Kotak Mahindra Bank.

It is important to have a diversified portfolio of investments. India’s growth story is intact and it might be in your interest to make wise investment decisions.
Investment matters are more so if you are an NRI. But managing them is not impossible.

Talk to us about your Investments

If you have any questions on the portfolio investment scheme for NRIs – please add them in the comment section.

portfolio investment scheme for NRI
Published on February 21, 2022

Hemant Beniwal


Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice in 2009 & is among the first generation of financial planners in India. He also authored Bestseller book "Financial Life Planning". 

  • If me an nri wants to do a gift deed of an immovable property, do i need to be physically present in india to do the gift deed.

    • Hi Ranjeet, You can invest in Indian Stocks with NRE as well as NRO account with the help of a DMat trading account linked to NRE or NRO account. Please approach a service provider to open DMAT account.

    • Hi Rahul, You can open a DMat account linked to NRO or NRE account. Investments made under NRO -linked DMat account cannot be repatriated. Investments made in NRE-Linked DMat account can be repatriated. Please contact Bank which provide DMAT account service for this. There are few service providers in India who provide banking services for NRI and few also provide ShareBroking services.

  • We have an NRO DMAT account. My broker is trying to link to a Non PIS NRO account. Is that possible. There is no repatriation needed.

    • Hi, It is possible to link Non-PINS account and PINS account to same trading account. All shares bought before becoming NRI are in Non-PINS account. All shares bought after becoming NRI will be stored in PINS account.

    • Hi Vishwanath, The DMat account you have opened when you have invested being a Resident Indian are in Non PIS NRO account. If you want to Buy shares when you are an NRI, you need to open a PIS DMat account.

  • I’m having some MF holdings with two fund houses which was opened when i was working in India, but now I’m working in abroad & I wish to change my tax status to NRI, what should I do for that?

    • You have to convert your PIS account as resident account within a reasonable time, say 3 months after your return back. If you want to convert the balance in foreign currency account, you plan to sell all shares in PIS account and convert the balance in Resident Foreign Currency Account in US Dollar or any other admissible foreign currency if you intend to go abroad again aftger few years or want to finance to your children studies abroad. Consult a CA.

  • Hi and thanks in advance. I’m an NRI for the past >10 years. I have stocks purchased when I was Resident Indian. These stocks still exist as they were in demat (not closed or sold). I don’t wish to sell the equities I possess in the RI account. Now, I want to open a new PIS account as NRI. That will mean that I could possess an old RI account and a new NRI concurrently. Is that ok ? What options do I have for the RI portfolio… what’s the best way to open PIS demat account if I could let the RI account be dormant as long as I have not returned back to the country.

    • Hi Tejas,
      You can open a PIS account online with Axis bank or HDFC securities or any other broker as per your convinent & after that you can transfer your current holding from RI demat account to new account.

      • Wrong advice. You cannot transfer your holding in Resident Accout to PIS accout. It is not permitted. As per the latest instructions you can continue your existing resident account and do the transactions as hitherto provided your fund this account out of your NRE or NRO account on non-repatriation basis and inform the Service Provider accordingy.

        • Additional Info: You can transfer from PINS DMat account to Non-PINS DMat account. But you cannot transfer from Non-PINS DMat account to PINS account.

  • My parents hold demat accounts and they plan to gift the shares to me. I am a NRi/NRE account holder , how will this process be undertaken, i am in the midst of opening a PIS account.

    • Hi Fareed,
      You just need to transfer the shares in your account but when you will tax show it as a gift. For better understanding consult a CA.

  • I have shares of Indian company that I bought from my NRE account. Every year the dividend declared by company was credited directly into my NRE account except in 2020 dividend declared by the company is not credited into my NRE account. My question is do I have to open PIS account to credit that dividend into my NRE account

    • Hi Thakor

      As per Law point, you have to open a PIS account for investment in equities. I would recommend you to talk to your bank or stock broker but you should definitely open a PIS account.

  • what is a PIS extension? Zerodha has asked me to get a PIS extension for opening Demat and trading account with them as I already have Demat and trading account with HDFC securities.

    • Hi Bharat

      May be they are asking for a PIS letter which you will receive from HDFC and that you need to submit in Zerodha.

        • Hi Bharat

          As per information provided by Sharekhan, PIS extension is kind of application that you will get from your bank and then need to submit.

    • Hi.Bharat, I am in same situation. Would like to know if you managed to get the ‘PIS extension letter’ from HDFC bank or HDFC Securities. I wrote to bank guys, they seems to have no clue. Thanks in advance

      • The PIS extension will be issued by the HDFC Bank and not HDFC securities.
        I got the extension from HDFC BANK and mapped the account with Zerodha.
        Its a long process but gets done eventually.

        • Thank you chief. HDFC bank guys are either ignorant OR acting ignorant. The only conclusion I can draw is that they are desperately trying not to loose customers moving to discount brokers.

    • It is somewhat no objection letter from the existing broker. If you want to transfer the PIS account from HDFC Bank, they HDFC bank will have to issue no objection letter along with all information about submission made to RBI.

      • I was told that you can ask the bank with whom you have the PIS account to split the account so it can be used for two trading accounts with different brokers.

        • The need of two brokers may not be necessary. IN PIS account, deliveryof shares is compulsory. You cannot do trading in shares. Find out from the concerned bank if it is allowed.

  • Do I have file tax since I am OCI and only rs 70000 long-term gain, Rs 60000 dividends, and Rs 20000 interest income? 20 % TDS is already deducted. I also paid donations of Rs33000 in 2020-21.

    • Hi Amit
      Yes, you must file the Income Tax for the year because your income is below the threshold limit thus you are eligible for the refund.

    • Long term capital gains you have to pay 10% tax. As a NRI tax deduction on dividend would have been 20.8%. Since your total income is less than Rs.2.5 lakh, if you file incometax return [ITR2)you will get refund of tax paid.

  • I have an NRE trading account it has been opened for more than 30 years I want to sell all my holdings, do I have to do any special procedure?

    • It is not clear what type of account you are holding. PSI scheme came little later I think. Whatever may be, there is no special procedure to be followed exept that you have to file ITR2 and pay long term/short term capital gain tax. If it is under PIS, the concerned Bank will deduct the tax and issue tax deduction statement showing capital gain tax deducted, etc. Since it is PIS account, the balance in the account is fully repatriable.

      • What he perhaps means that the secondary account maintained with the bank for buying and selling of shares. Since this is Non-Resident External account, the interest earned in the Bank account is tax free.

    • Ensure that the shares are aready credited to your demat account. Once shares are available in demat account, there should not be any restriction for sale of shares. Bank will deduct short term capital gain tax at 15% on the sale proceeds.

  • I need to open a trading account in Zerodha. For that, they are asking a PIS letter. how to get it…I am having an NRI account with HDFC bank.

    • You mean you want to transfer your PIS account from HDFC Bank to Zerodha. HDFC Bank has to issue PIS extension letter so that you can transfer your account from HDFC Bank to Zerodha. My advise to you to retain the account with HDFC Securities evethough the brokerage charged by them is slightly high. You yourselves can see how once famous Karvy Broking cheated its client by mortgaging or selling clients share.

  • How can I transfer my pis account from one broker to another broker? I understand we can hold a pis account with one broker only for NRI?

    • Hi Kanika,

      As per my knowledge you can transfer it to another broker. You can consult with your broker for the procedure.

    • Hi Mathew,
      As per knowledge the basic difference between NRE And NRO PIS account is the secondary market transaction executed in NRE status will be reported to RBI and hence routed through PIS while the secondary market transactions executed in NRO mode will not be reported to RBI.

      • Yes. The balance in PIS account is freely repatriable . The balnce in NRO account is repatriable after completing some formalities and payment of tax etc.

    • Hi Nandakumar,
      For permission, you have to apply for it at your respective bank to that the RBI has authorized to administer the PIS.

  • Im an NRI from Singapore and I was able to open my demat account in upstox while I was in India for an 1 month vacation during Jan/Feb this year using my India number that is linked to my Aadhar. My KYC states I am a NRI and my upstox account is liked with my NRO account. I am able to buy stocks via the app and I dont intend to do intraday as I am more towards purchasing and holding my stocks for long term. Am I supposed to realign any of this arrangement, as I later found out that NRI has different restrictions for investment in Indian stock market? Or is it fine to continue with the current arrangement?

  • If an NRI buys a bond through NRE PIS account …is the principal and interest paid back in NRE or NRO…Also,how can you find which are NRI eligible bonds.

  • Which banks allow to open PIS now, tried calling Icici and Axis and both are not taking applications to open account.

  • If the portfolio value of the NRI PIS account is 1 crore or above then does the NRI need to get the same audited?

  • Hi.

    Under LRS, it is allowed to remit upto USD 2.5lks PA abroad to children by parents for many purposes one on which is As Gift/Donation also.

    If children are NRIs n are
    already holding NRE account in India, can the same amount of USD 2.50 lks PA as allowed under LRS be transferred directly by parents from their local account into their children’s NRE account through any authorised dealers/banks in India?

  • If I convert my existing NRE account to NRE PIS account, will there be any issues for me to do personal transactions with the account or I should only use the account for Shares purchase/sell??

  • Q:Why NRO PIS accounts are prohibited from applying for IPO by a reputed private bank. Any known bank which allows me to invest in IPO with my NRO PIS account?
    Thanks

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