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RBI regulations for NRI/PIO/OCI investors.
Who is a Non-Resident Indian (NRI)?
"Non Resident Indian" means a person who is a citizen of India residing outside India for carrying out employment or on business or vocation.
Who is a Person of Indian Origin (PIO)?
A citizen of any country (other than a citizen of Bangladesh or Pakistan) is deemed to be a Person of Indian Origin (PIO), if-
- He, at any time, held an Indian passport, or
- 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, or
- A spouse (not being a citizen of Bangladesh or Pakistan or Sri Lanka) of an Indian citizen or of a person of Indian origin is also deemed to be PIO.
What is Overseas Citizen of India (OCI)?
Overseas Citizenship of India is not a full citizenship of India and thus, does not amount to dual citizenship or dual nationality.
The Central Indian Government, on application, may register any person as an Overseas Citizen of India if that Person is of Indian Origin and is from a country which allows dual citizenship in some form or the other & has never been a citizen of Pakistan or Bangladesh.
Can NRIs/PIO/OCI invest in shares in India through a stock exchange?
Yes, they can purchase shares of an Indian Company through stock exchanges, under the Portfolio Investment Scheme (buying through the secondary market).
What are the regulations for NRIs/PIO/OCI to invest in India?
- NRIs/PIO/OCI can invest in the Indian stock market on repatriable or on non repatriable basis through the Portfolio Investment Scheme (PIS).
- Different bank and demat accounts need to be maintained for repatriable and non repatriable investments.
How are the investment positions of NRIs monitored?
The Reserve Bank of India (RBI) oversees the investment positions of NRIs/FIIs in listed Indian companies which are reported by designated banks, on a daily basis. Whenever the total holdings of NRIs/FIIs under the scheme reaches the limit of 2% below the sectoral cap, Reserve Bank issues a notice cautioning the designated banks and its branches to take prior approval from the RBI for any further purchases of shares of the particular Indian company. If the shareholding by NRIs/FIIs reaches the statutory limit, the Reserve Bank places the company in the ban list upon which no NRI can purchase the shares of the company under the Portfolio Investment Scheme.
What is the limit on the investments that can be made by NRIs in equity shares and debentures in India?
NRIs are allowed to invest through designated banks (under PINS route) up to 5% of the paid- up capital/paid-up value of each series of equity shares/debentures of listed Indian companies. The overall purchase made by all NRIs cannot exceed 10% or as prescribed by RBI from time to time.
Is a Non-Resident Indian required to seek permission from the RBI for investments in mutual funds?
NRI’s need not seek permission from the RBI to invest and redeem units in mutual funds.
Are NRIs required to take approvals from RBI for selling securities acquired through IPOs/private placement?
No, NRIs can sell such shares/debentures on the exchange without any approval. However, the bank should be provided with the details regarding date of allotment and cost of acquisition while seeking the credit of sale proceeds to NRE/NRO account.
What kind of bank accounts do NRIs need in order to invest in India according to RBI guidelines?
In order to invest in equity (secondary market) an NRI would need to open Portfolio Investment Scheme (PIS) linked Non Resident External (NRE) or Non Resident Ordinary (NRO) account. To invest in IPO and mutual funds an NRI would need Saving linked NRE or NRO account. Investments in Futures & Options can only be made through Saving linked NRO account which also supports investments in IPO and mutual funds.
What kind of transactions can NRIs make?
NRIs can only make delivery transactions as per RBI guidelines. Intra-day trading is not allowed for NRIs. Short Selling is not permitted.
What type of bank accounts can NRIs open in India for investment purposes?
NRI should open a new bank account (NRE/NRO or both) with a designated bank which is approved by RBI (Reserve Bank of India) for this purpose.
What is NRE account?
Non Resident External (NRE) account is a Rupee denominated account meant for NRIs which allows repatriation of funds. This means that the funds can be freely sent to any other country. NRE account can contain funds remitted from abroad, or obtained from another NRE/FCNR account maintained in India. The interest earned on deposits in an NRE account is exempt from tax in the hands of the NRI.
What is NRO account?
Non Resident Ordinary (NRO) account is a Rupee denominated account which allows repatriation of upto 1 million USD. NRI can repatriate up to USD 1 million, for bonafide purposes, per financial year from balances in NRO Accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties held by NRIs/PIO (Person of Indian Origin) for a period of 10 years. In case a property is sold after being held for less than 10 years, remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance period in eligible investments. The interest earned on deposits in an NRO account is taxable in the hands of the NRI as per the applicable income tax slab rates.
What is the difference between NRE and NRO bank account?
Portfolio Investment Scheme
What is Portfolio Investment Scheme (PIS)?
Portfolio Investment Scheme (PIS) is a scheme of Reserve Bank of India which allows Non Resident Indians (NRIs) to purchase/sell shares/convertible debentures of Indian companies on Stock Exchanges. For this purpose, the NRI has to apply to a designated bank, approved by RBI which deals in Portfolio Investment Scheme. All sale/purchase transactions will be routed through this designated bank. At the end of the day, your trades are reported to the respective designated bank, which in turn would report the same to RBI.
How many PIS accounts can an NRI open?
Any NRI or a PIO wanting to trade or make investments in the Indian Equity Secondary Market must have (only) one PIS account with only one designated bank in India. Please note:
- Only Non Resident Indians require PIS account.
- PIS account is only for facilitating trades in Indian equity markets and not in foreign markets.
- It is not required for making investments in mutual funds/IPOs/derivatives.
What are the types of PIS accounts?
There are two types of PIS accounts:
- NRE PIS account
- NRO PIS account
Why is a PIS required?
For any Indian company the foreign investment into that company cannot cross a certain limit. This limit is different from company to company and sector to sector. These limits have to be monitored under FEMA regulations.
What are the documents required for reporting transactions under PIS?
The contract note of the broker should reach PIS department within one working day following the day of transaction for reporting any transaction under PIS.
Is PIS account required for investment in all products?
No. Only the investments made in the secondary markets are to be routed through a PIS account. For other products the investments can be done through direct subscription route.
Movement of Funds in NRI Bank Account
Can funds be transferred from NRE to NRO account?
Yes, funds can be transferred from NRE to NRO account without any restriction.
Can funds be transferred from NRO to NRE account?
No, funds cannot be transferred from NRO to NRE account.
What happens if the NRI holding the NRE/NRO accounts returns to India?
If the NRI holding the NRE account returns and becomes a resident of India, the NRE account is converted into a regular resident account.
Under what circumstances can proceeds from investments made under PIS are repatriated?
The repatriation of the sale proceeds, net of taxes, are allowed if the original investments were made out of funds from NRE account or by means of remittance from abroad.
Brokerage and Demat Accounts through Reliance Securities Ltd.
What all does an NRI need to start investing?
- NRI Trading Account with Reliance Securities (for Delivery trading on BSE/NSE and for Mutual Funds MFSS/BSE STAR)
- NRI Demat Account with Reliance Securities (for Demat Holdings purchased and sold)
- NRE PIS linked bank account with any one (Yes Bank or Axis Bank) for investing in Equity/Mutual Fund segment
What is a brokerage or trading account?
A brokerage account is the online broking account with Reliance Securities Ltd. which facilitates buying and selling of shares online. Since the brokerage account is only a facilitator account, it does not require any joint holding or nomination. Brokerage account is opened in the name of the sole holder only.
What is a demat account?
Demat account is a short form of Dematerialized Account. In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates. A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place.
Where can an NRI open a demat account?
NRI needs to open a Demat account with Reliance Securities Ltd.
What is the procedure of dematerialization?
Client submits a Dematerialisation Request Form (DRF) along with the physical share certificate to Reliance Securities Ltd., who in turn forwards it to the Registrar & Transfer agent for confirmation from the company. After the confirmation is received the client a/c is credited.
How many accounts does one need to open to invest through Reliance Securities Ltd. in India?
A customer will need to open one NRE PIS Account to invest in Equity.
Which bank accounts can I link with my brokerage account?
You can link your NRE PIS account to your Reliance Securities Ltd. brokerage account.
What happens in case a Non-Resident Indian becomes a resident in India?
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. Trading member also needs to open a new trading account which needs to be uploaded with the new category code.
Can shares held in NRO demat account be transferred to NRE demat account?
No, these shares cannot be transferred into NRE Demat Account.
Does RSL offer trading accounts to USA and Canada based NRIs and PIOs?
What is Tax Deducted at Source (TDS)?
As per regulatory guidelines, before crediting sales proceeds of equity segment it is the responsibility of the Banks and the PIS cell to determine the appropriate Tax for all profits made in equity market transactions and deduct it at source. Whereas, in case of NRO-Saving derivative transactions, the customer is solely responsible for filing his taxes.
Is the capital gain tax applicable to NRIs?
Shares held for more than 1 year are long term capital, if the same shares are sold after 1 year from the date of its purchase then there will be no long term capital gain tax applicable.Shares held less than 1 year are short term capital; if the same shares are sold within 1 year from the date of its purchase then the gains from the transactions would be taxed.
What is the procedure for TDS deduction?
For any TDS to be deducted and money to be remitted to bank account, there are three things which have to be verified.
- Profits = Selling price – Purchase price
- Duration of holding (long term or short term) = Selling date – Purchase date
- Source of fund for purchase i.e. NRE or NRO
Important: TDS is deducted only at the time of crediting sales proceeds.
Who is responsible for filing Tax returns for NRI Investors?
In case of PIS transactions Bank is responsible for filing the Tax returns of the NRI Investors. Whereas, in case of NRO-Saving derivative transactions, the customer is solely responsible for filing his taxes.
How do I become a Reliance Securities Ltd. customer?
In case the customer already has an NRE/NRO PIS account with Yes Bank or Axis Bank and wants to open a Trading and Demat account with Reliance Securities Ltd., he can do so by filling up the Account Opening Form available in the “Downloads” section of the Reliance securities website (http://www.rsec.co.in/customer-service/download-forms).
The customer can also get in touch with the nearest branch and can ask for a Physical copy of the RSL Account Opening Form.
To open Trading and Demat accounts with Reliance Securities, the customer needs to fill, sign up all the above mentioned forms and required Documents and can courier the documents to RSL Central Back office at Chennai:–
Reliance Securities Ltd, C/o Computer Age Management Services Pvt. Ltd., Rayala Towers, 158, Anna Salai, Chennai - 600002 Ph: 044 30212752, Mobile: 9940189379
What are the documents required to open an RSL account?
How can I open an NRI bank account for trading with RSL registered banks?
NRI Investors can open bank accounts by visiting the bank website and following there instructions:
Yes Bank -
Axis Bank –
The customer can also approach his nearest such bank branch for availing NRI bank account opening forms.
To open a bank account with RSL recognized banks (Yes Bank or Axis Bank) the customer needs to fill, sign up all the above mentioned forms and can courier the documents to above RSL Central Back office at Chennai.
RSL will forward the relevant forms and documents to the bank. Once the bank account is opened the bank will issue a certificate to RSL giving the account number and relevant account details of the customer.
What if the NRI has an already existing NRI bank account but not with Yes Bank or Axis Bank?
- NRI Customer will have to close his existing PIS NRE and NRO accounts and open new bank accounts with Yes Bank or Axis Bank accord.
- Trading/Demat accounts with Reliance Securities Ltd. can be opened, as per the process described above.
- The customer would also need to apply to his existing designated bank to issue the necessary 'No Objection' certificate that would give details of the latest status of his portfolio as on the date of the issue. This certificate has to be submitted to new bank where customer is willing to shift his NRE/NRO bank account.
How long does it take for RSL to open the integrated set of accounts?
It would take a maximum of 14 days (provided copies of the PAN cards of all the demat holders are supplied) from the date the duly filled-in application is received by our office. This also includes the time required by the Bank to grant the necessary approval under the Portfolio Investment Scheme.
How to get a Pan Card from abroad or any other part of the world?
Getting a ‘PAN CARD’ is a simple process that can be done online. Please note that PAN card mailing overseas is allowed to some countries. NRIs wanting to apply for a PAN card from abroad can check the list of countries given below.
- Document that has your overseas address on it. The best document to use is your bank statement showing your overseas address.
- Copy of passport.
- 2 Color photograph (size 3.5 cm x 2.5 cm).
- The fee for processing PAN application is Rs. 105 (including service tax) if communication address is of India.
- The fee for processing PAN application is Rs. 971 (including service tax) if communication address is of outside India.
- Demand draft and cheque should be drawn in favour of 'NSDL - PAN'.
- Demand draft shall be payable at Mumbai and the acknowledgment number should be mentioned on the reverse of the demand draft.
- Payment by Credit Card/Debit Card/Net Banking can be made by/for Self, immediate family members (parents, spouse, children).
How to apply for PAN through online applications from any part of world?
- Log on to ONLINE PAN CARD website: https://tin.tin.nsdl.com/pan/form49AA.html
- Scroll down to the bottom of the page where you see: Apply for a new PAN Card' and select Individual from the drop down menu bar.
- Application for Pan Card Form49AA will open.
- Fill in the form. Read Guidelines on filling form and Instructions on filling form if you wish. When filling in the address make sure it is the same overseas address that is shown on your address proof.
- Once the form is filled, review it to ensure everything is correctly filled and click submit.
- An acknowledgement will appear on the screen if form was submitted correctly.
- Print out at least two copies of the acknowledgement. (One copy is for your record)
- Paste your 2 photographs on one of the printouts of acknowledgement and sign in black ink.
- Demand draft shall be payable at Mumbai and the acknowledgment number should be mentioned on the reverse of the demand draft.
- Sign on all pages of the photocopies of your passport and your bank statement.
- (Black pages of passport are not required to be copied)Mail all documents to NSDL, PAN unit at Mumbai.
- You can track the status of your application by using your acknowledgement number.
What are the list of countries, where PAN is issued in India but dispatched to other countries by Government of India?
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Equities Capital Market:
INB 231234833 | BSE:- INB 011234839
NSE:- INF 231234833 | BSE:- INF 011234839
NSE:- INE 231234833 | BSE:- INE 011234839
CDSL SEBI Registration Number Depository Participant:
NSDL SEBI Registration Number Depository Participant:
Mutual Funds :
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IRDA Corporate Agent (Composite) Registration Number :
CA0195 (valid till 31-Mar-2019)
Corporate Identity Number:
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Compliance Officer :
Mr. Palkesh Shah (email id: firstname.lastname@example.org
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