Guidelines for Investments in Indian Equity Market:
All NRI / PIO (Person Of Indian Origin) are allowed to invest in Indian Stock Market through a special purpose vehicle proposed by the Reserve Bank Of India (RBI) called Portfolio Investment Scheme (PIS). Like a normal Indian investor the NRI also needs to have a Trading Account and Demat Account. But for banking activities he has to have a separate PIS account. To have these three types of account an NRI needs the following.
1 Designated Bank to facilitate opening of PIS Account (AXIS Bank, Ghatkopar(E) Branch)
2 Trading Member/Broker to provide a Trading Account (ShareKhan)
3 Depository Participant to provide a Demat Account (ShareKhan)
Mr.Yeshwant Mehta, Chartered Accountant, is specialized and well experienced in portfolio management and he is appointed as an authorized remisser by ShareKhan (Code Number: Y 017) one of the India's leading brokerage houses, with over 510 share shops in 170 cities, and India's premier online trading portal. Our customers enjoy multi-channel access to the stock markets. Portfolio Investment Scheme: Schedule 2 and 3 of the Notification No. FEMA 20/2000 RB contains provisions relating to Portfolio investment by NRIs. OCBs are not allowed to make fresh investments in India under the Portfolio Investment Scheme vide Notification No. FEMA 46 dated 29th November 2001. Further, in September 2003, RBI has banned OCBs from investing in any manner in India. In fact, the category of OCB has been abolished. However, they can continue to hold and sell shares purchased before 29th November 2001.
Portfolio investment is covered by general permission subject to following condition/provisions.
(i) Investment is permitted on repatriation as well as non-repatriation basis.
(ii) Purchases, sale of shares (Preference and Equity) and/or convertible debentures are covered.
(iii) Purchase/sale is done through registered broker of a registered broker of a recognised stock exchange.
(iv) One bank branch must be designated by NRIs and all purchase/sale must be routed through that designated bank branch only.
(v) All transactions of sales and purchase must be delivery based. Speculative transactions are not allowed.
(vi) Mode of investment may be in any of the following ways:
(a) For investment on Repatriation basis
- inward remittances through normal banking channels
- out of FCNR/NRE account.
(b) For investment on non-repatriation basis Besides the above two, investment can be made out of NRO account.
(vii) Ceiling on Investment
(a) Per investor - 5% of the paid-up value of shares of an Indian Company on both repatriation and non-repatriation basis.
- 5% of the value of each issue of convertible debenture of an Indian Company on both repatriation and non-repatriation basis.
(b) Per investee Company
(Total holding by all NRIs put together on both repatriable as well as non-repatriable basis.)
10% of paid-up value of shares of an Indian Company.
10% of paid-up value each series of convertible debenture.
This ceiling of 10% could be increased to 24%, if the General Body of concerned Indian Company passes a special resolution to that effect. It is interesting to note that FIIs are allowed to increase their investments under portfolio investments scheme up to the sectoral cap. Whereas NRIs are allowed to increase the limit only up to 24%.
(viii) Repatriation of Sale/Maturity Proceeds
(a) Sales proceeds of Investment held on repatriation basis can be credited to NRE/FCNR/NRO account after payment of applicable taxes.
(b) If investment is on non-repatriation basis, credit of sale/maturity proceeds is permitted in NRO account.
(ix) Existing OCBs (i.e. prior to Sep 16, 2003) must intimate the designated bank branch immediately on the holding/interest of NRIs in the OCB becoming less than 60%.
(x) NRIs are allowed to enter into forward contracts to hedge their investment made in India.
(xi) NRI is also permitted to invest in exchange traded derivatives contracts approved by SEBI from time to time out of his Rupee funds
held in India on Non-Repatriable basis subject to the limits described by SEBI.
(xii) NRIs can also invest without limit on repatriable basis in Government dated securities, treasury bills, units of domestic mutual funds, bonds issued by PSUs, shares in public sector enterprises which are being disinvested by Government. They can also invest without limit on non-repatriable basis. In Government dated securities,treasury bills, units of Domestic mutual funds, units of Money market mutual funds. However, NRIs are not permitted to make Investments in Small Savings Schemes including PPF.
PORTFOLIO INVESTMENT SCHEME (PIS) the facility whereby an NRI can deal in shares on repatriation/non-repatriation basis .
1. NRE Savings Bank Account with AXIS Bank,Ghatkopar Branch, Mumbai
2. NRE PIS Savings Bank Account with AXIS Bank,Ghatkopar Branch, Mumbai
3. NRE Demat Account with ShareKhan Broker
4. PIS Permission -Repatriable with AXIS Bank
1. NRO PIS Savings Bank Account with AXIS Bank, Ghatkopar Branch, Mumbai
2. NRO Savings Bank (Normal) Account with AXIS Bank, Ghatkopar Branch
3. NRO Demat Account with ShareKhan Broker
4. PIS Permission -Non-Repatriable with AXIS Bank
Bank Account, Trading & Demat Account Checklist:
Below are the list of forms and documents require to open a Saving Bank & PIS account with AXIS Bank and Trading & Demat Account with ShareKhan broker. Mandatory Requirements:
1. AXIS Bank NRI Account & PIS: FORM
2. ShareKhan Trading & Demat Account: FORM
3. NRI Check List Check List
NRi Trading Account Opening Fee : US$ 310 One time trading account, demat account and Axis Bank PIS accounts opening charges plus courier charges
Monthly Fee(Optional) : US$ 410 (per month) to get hot tips, market trend, market news on a regular basis plus liasion work with Axis Bank & Share broker.