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Welcome to The NRI Desk FAQ |
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Who is an NRI? |
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Who is a
PIO? |
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A citizen of
a foreign country (other than a citizen of Bangladesh or
Pakistan) is a PIO if:
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He/She at any time held an Indian Passport. OR
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He/She or either of his parents or any of his/her grandparents
was a citizen of India; OR
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Spouse (not being a citizen of Bangladesh or Pakistan) of an
Indian citizen (a) or (b) above.
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What are
the products offered to NRIs? |
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NRIs can invest in the following
products.
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Equity trading on BSE and NSE
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Derivatives trading on the NSE
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IPO online
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Portfolio Management
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Investments in Mutual Funds
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What steps
an NRI needs to take to start investing in the Indian Stock
Market? |
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An NRI
should open a new bank account (NRE/NRO or both) with
designated bank which is approved by RBI (Reserve Bank of
India) for this purpose.
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He should
apply for a general approval for investment in Indian Stock
Market through his designated bank branch.
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He should
open a Demat Account with Religare Securities Ltd to hold
his shares and register with Religare Securities Ltd to
execute his buy/sell orders on the stock exchange(s).
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What type of saving bank
account(s) can be opened by an NRI or PIO in India? |
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Any NRI/PIO
can open two types of savings accounts with any bank in India.
They are NRE and NRO bank accounts. |
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What is a
NRE account? |
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A NRE bank
account is an external saving bank account opened for Non
Resident Indians. This is why it is known as Non-Resident
External account. Since it is an external account, any monies
lying in NRE account can be taken outside the country or in
other words, the monies lying in NRE account are fully
repatriable. This money can be converted into any foreign
currency at the behest of the account holder and can be remitted
outside the country. |
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What is a
NRO account? |
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A NRO bank
account is an ordinary saving bank account opened for Non-
Resident Indians. This is why it is known as Non-Resident
Ordinary account. Since it is an ordinary account i.e. as good
as a normal saving bank account, monies lying in NRO account
cannot be taken outside the country or in other words, the
monies lying in NRO account are not repatriable. |
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Can money
be transferred from NRE account to NRO account?
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Yes money can
be freely transferred from NRE account to NRO account. |
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Can money
be transferred from NRO account to NRE account?
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No, money
cannot be transferred from NRO account to NRE account. |
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What is the status of NRO/NRE accounts on the
return of the account holder to India?
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RBI has
advised banks to re-designate such accounts as resident accounts
on return of the account holder to India.. |
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In case a
resident Indian becomes a non-resident, will he/she be required
to change the status of his/her holding from Resident to
Non-Resident? |
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Can NRIs
invest in shares, debentures and units of Mutual Funds in India? |
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NRIs are
permitted to make direct investments in shares/ debentures of
Indian companies/ units of mutual fund. They are also permitted
to make portfolio investments i.e. purchase of share /
debentures of Indian Companies through stock exchange. These
facilities are granted both on repatriation and non-repatriation
basis. |
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NRIs
subscribe to public issues? What are the permissions/approvals
required? |
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Yes. The
issuing company is required to issue shares to NRI on the basis
of specific or general permission from GOI/RBI. Therefore,
individual NRI need not obtain any permission. |
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Does an NRI require any
permission to receive bonus/rights shares? |
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No.
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What is
PIS? |
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Portfolio Investment Scheme (PIS) is a scheme of the Reserve
Bank of India (RBI) defined in Schedule 3 of Foreign Exchange
Management Act 2000 under which the ‘Non Resident Indians (NRIs)’
and ‘Person of Indian Origin (PIOs)’ can purchase and sell
shares and convertible debentures of Indian Companies on a
recognized stock exchange in India by routing all such
purchase/sale transactions through their account held with a
Designated Bank Branch.
Any NRI or a PIO wanting to trade/make fresh investments in the
Indian Equity Secondary Market needs and must have one PIS
account with only one designated bank in India. Notes:
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PIS account
is applicable only for NRIs and not for resident Indians.
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It is only
for trading in Indian markets and not any other foreign
markets.
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It is
applicable only for equity trades and not MF investments.
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What are
the types of PIS account? |
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There are two
types of PIS account:
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NRE PIS
account
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NRO PIS
account
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Why is PIS
required? |
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For all the
Indian companies or companies listed on Indian stock exchanges,
there are certain limits which have to be monitored under FEMA
regulations. For any company the foreign investment into that
company cannot cross certain limit. This limit is different from
company to company and sector to sector. Also individually any
NRI or a PIO cannot invest more than 5% in any Indian company.
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How many PIS account can a
NRI open?
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NRI/PIO can
open only one PIS account with any designated banks (Preferred
bank – UTI Bank) in a prescribed format for PIS account, upon
which the bank can issue a PIS approval letter to the investor. |
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Can I
invest in all products through PIS account?
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No. Any
investment done in secondary market should be routed through a
PIS account. For other products the investment can be done
through direct subscription route.
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What is a
NON PIS Account? |
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It is a
normal savings bank account which can be opened with any bank in
India. Non-PIS is an account for which the transactions are not
reported to RBI. This account takes care of selling all those
shares which are not allowed under PIS. Shares acquired under
IPO or received as gift or bought as resident Indian can be sold
under Non-PIS account. |
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What are
the types of NON PIS Account? |
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There are two
types of NON PIS account
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NRE NON PIS
account
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NRO NON PIS
account
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What type
of transactions is allowed under NON PIS account?
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Shares acquired through IPO’s
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Gifts from relatives or otherwise
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Shares bought as resident Indian
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What is meant by investment
through direct subscription route? |
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As per the
regulations NRIs are allowed to invest up to a certain
percentage of the total paid up capital of the company by
directly subscribing to the equity/convertible debentures of the
company either though a public offering made by the company or
through private placements on one to one basis. Regulations
provide for different ceilings on such investments based on the
industry to which the company belongs and also the nature of
investments (repatriation / non-repatriation basis). |
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Do
investments made through IPO’s or Private placements come under
PIS? |
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No.
Investments made by NRIs though subscription to Initial Public
Offerings (IPO’s) or Private placements are not covered by
Portfolio Investment Scheme. Such investments are covered by
RBI's regulations with regard to Foreign Direct Investments. |
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Do NRIs
need any permission of RBI to subscribe for IPO’s or Private
placements of equity shares/convertible debentures of existing
or new companies? |
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No. NRIs do
not require any permission to invest though Initial Public
Offerings (IPO’s) or Private placements. In such cases, the
Issuing Company should comply with all necessary regulations for
issuing securities to a person resident outside India. |
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Do NRIs
need approvals from RBI for selling securities acquired through
IPO’s/Private Placement? |
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No. NRIs can
sell such shares/debentures on the Exchange without any
approval. However, while seeking the credit of sale proceeds to
NRE/NRO account, the bank should be provided with the details
regarding date of allotment and cost of acquisition to calculate
the taxes, if any.
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Can an NRI have investments
under PIS on repatriation and non-repatriation basis? |
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Yes.
Investment can be made on repatriation as well as
non-repatriation basis. However, an NRI will have to open NRE
account as well as NRO account with designated bank branch as
the sale proceeds of non-repatriation investment can only be
credited to NRO account. |
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Under what circumstances can investments made under PIS are
repatriated? |
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The
repatriation of the sale proceeds, net of taxes, are allowed if
the original purchase was made on repatriation basis and such
investments were made out of funds from NRE/FCNR account or by
means of remittance from abroad. |
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What are
the provisions for corporate benefits for investment on
repatriation and non-repatriation basis?
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Corporate benefits may be in the form of dividend, interest,
rights, bonus, etc. Any corporate benefit resulting out of
investment in securities on non-repatriation basis will not
carry the right of repatriation. Similarly any corporate benefit
resulting out of investment in securities on repatriation basis
will carry the right of repatriation. This is subject to change
depending on prevailing RBI regulations. |
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Where can an NRI/PIO open a demat account?
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NRI/PIO needs
to open a demat account with Religare Securities Ltd. |
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Can investments made under
different schemes be held under a single demat a/c? |
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No.
Securities received against investments under ‘Foreign Direct
Investment scheme (FDI)’, ‘Portfolio Investment scheme (PIS)’
and ‘Scheme for Investment’ on non – repatriation basis have to
be credited into separate demat accounts. Investment under PIS
could be on repatriation or non – repatriation basis. Investment
under FDI scheme is on repatriation. |
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What is
the procedure of Dematerialization? |
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Client
submits a DRF form along with the physical share certificate to
Religare 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. |
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What is
TDS? |
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As per
regulatory guidelines, Tax (if applicable) has to be deducted at
source for all the profits done in the equity market
transactions. Before crediting sales proceeds it is the
responsibility of the broker and the PIS cell to determine the
appropriate Tax and deduct it at source.
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What are
the types of rates applicable? |
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TDS rate is
different as per the tenure of the investment. It can be
classified into
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Long-term capital gain – If the period of holding is more than
1 year i.e. the difference between the date of purchase and
sell is more than 1 year, then the TDS rate applicable is 0
%. Before 1st Oct 2004 this rate was 10% now it is tax-free.
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Short-term capital gain - If the period of holding is less
than 1 year i.e. the difference between the date of purchase
and sell is less than 1 year, then the TDS rate applicable
is 10%. Before 1st Oct 2004 this rate was 30%.
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How is TDS
computed? |
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TDS is
computed on the profit amount or the gain as per the applicable
rate i.e. short term or long term on a First-In, First-Out
(FIFO) basis. |
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How the
TDS deducted and money is transferred to the bank account? |
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For any TDS
to be deducted and money to be remitted to bank account, there
are three things which have to be verified.
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Amount of gain = Selling price – Purchase price
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Duration of holding i.e. long term or short term = Selling
date – Purchase date
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Source of fund for purchase i.e. NRE or NRO
Important: TDS is deducted only at the time of crediting sales
proceeds. |
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What is
PMS? |
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Portfolio Management Services provides the benefits of
diversification across assets, sectors, and funds. The experts
in Portfolio Management combine best of breed investment of
avenues as they aim to achieve optimal returns at managed levels
of risk. It is transparent collective investments. |
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What are
the schemes under PMS offered by Religare Securities Ltd.? |
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Religare Securities Ltd offer three types of PMS
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Panther
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Tortoise
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Elephant
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How do I
Invest in PMS? |
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Investment in PMS can be done through PIS account. To know more
about PIS account please Click here. |
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Where can I open my PMS
account?
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You need to
open your PMS account with Religare Securities Ltd. |
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What are
Derivatives? |
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NRIs can also
trade in futures and options by utilizing the funds of NRO Non
PIS account (Normal NRO Savings account). NRI needs to take a
Unique Client Code (UCC) from the NSE through a clearing member.
Religare, being a clearing member will get the code from NSE and
enable you to trade in derivatives. Trading in derivatives will
help you to hedge your equity holdings. |
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How do I
invest in Derivatives? |
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You can
invest in Derivatives through NON PIS account. |
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How do I
Invest in Futures and Options? |
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NRIs can
invest in exchange traded Derivative Contracts approved by SEBI
from time to time out of INR funds held in India on
non-repatriable basis (NRO) subject to the limits prescribed by
SEBI. |
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What is
Mutual Fund? |
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A mutual fund
is nothing more than a collection of stocks and/or bonds. You
can make money from a mutual fund in three ways:
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Income is earned from dividends on stocks and interest on
bonds. A fund pays out nearly all income it receives over
the year to fund owners in the form of a distribution.
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If the fund
sells securities that have increased in price, the fund has
a capital Gain. Most funds also pass on these gains to
investors in a distribution.
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If fund
holdings increase in price but are not sold by the fund
manager, the fund's shares increase in price. You can then
sell your mutual fund shares for a profit.
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How do I
invest in Mutual Funds? |
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You can invest in Mutual Funds
through NON PIS account. |
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What do you mean by Equity
Trading on BSE and NSE? |
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NRIs can buy
and sell shares seamlessly through Religare Securities Ltd. You
can invest from your NRE as well as your NRO funds. As an NRI,
it is mandatory to open a Portfolio Investment Scheme (PIS)
account through a RBI accepted designated Bank. Our preferred
designated banker is UTI Bank. However, you can open with any
bank for the PIS services. In case, you already have a PIS
account, you can link the same to the trading and demat account
opened through us. At the end of the day, your trades are
reported to the respective designated bank, which is turn would
report the same to RBI. |
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What is
the limit for the purchases of Equity shares/convertible
debentures in each company? |
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The purchase
of Equity shares/convertible debentures in each company with
repatriation and non repatriation benefits shall not exceed 5%
(or as prescribed by Reserve Bank of India from time to time) of
the paid up capital of the company, subject to an overall
ceiling of 10% (or as prescribed by Reserve Bank of India from
time to time). All consequences of failure in such compliance,
including any losses arising out of reversal of transactions
shall be to the customer’s account. |
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How much
is the risk involved while investing in Equity Investments? |
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Equity
investments are subject to market risks and there is no
assurance or guarantee that the objective of the portfolio
management service will be achieved.
As with any investment in securities, the net asset value of the
managed portfolios can go up or down depending on the factors
and forces affecting capital markets.
Past performance of the portfolios does not indicate the future
performance. |
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What is
International Equity Commodity? |
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International Equity division provides an opportunity for
investors to scale up their investment horizon, by tapping into
International Equity and Commodities markets.
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