India is one of the fastest growing large economy of the world. Many global investors
eye to take part in India’s growth story by investing in the Indian Capital Markets.
While foreigners are not allowed to invest directly in the Indian markets, the Government
of India has allowed NRIs to directly invest in the Indian markets.
From geographic and currency diversification benefits to unparalleled growth potential,
there are many reasons why NRIs should strongly consider investment in India. There
are many investment avenues for NRIs in India:
NRIs can invest in the Indian stock market under PIS (Portfolio Investment Scheme),
which is regulated by RBI. NRIs are allowed to trade in Indian markets for investment
purpose and not intraday speculation purpose.
One can start investment process by following the below mentioned four steps.
- Open an NRE / NRO Bank Account
- Get PIS permission (often a separate account maintained by the bank)
- Open an NRE / NRO Demat and Trading accounts
List of securities that have breached foreign holding and hence not allowed for
further investment by NRIs is available at:
- PAN Card
- Passport identification and arrival stamp pages
- Foreign address proof (valid Driving License / Passport / Last two months’ bank
- Indian address proof for correspondence (not mandatory) (Electricity bill / Driving
license / Voter ID / Ration Card)
- Cancelled cheque with printed name of the account holder
- PIS letter
- FATCA Declaration
- Passport size pictures (two)
- Nominee details (PAN / AADHAAR / Picture)
If person wants to open Demat and Trading A/c from foreign countries then: All the
supporting mentioned documents must be notarized in foreign countries.
If you want to appoint a Power of Attorney (PoA) to operate the account, additional
details of the PoA holder are required:
- Copy of the Notarized PoA
- Passport picture
- Copy of PAN Card
- Rubber stamp
PIS is a RBI regulated scheme and is required if NRIs/PIOs want to trade in secondary
market in India through SEBI registered share broker. Foreign Institutional Investors
(FIIs), Non-Resident Indians (NRIs), and Person of Indian Origin (PIOs) are allowed
to invest in the secondary capital markets in India through the portfolio investment
scheme (PIS). Under this scheme, FIIs/NRIs can acquire shares/debentures of Indian
companies through the stock exchanges in India.
NRIs are permitted to invest in shares / convertible debentures of Indian companies,
by Reserve Bank of India, under Portfolio Investment Scheme (PIS), in secondary
market through a registered broker on a recognized Stock Exchange. The guidelines
of Reserve Bank of India in respect of ceiling on investments are as under:
- Investment in shares of a company, by each NRI (both on repatriation and non-repatriation
basis) shall not exceed 5% of the paid-up value of shares of the company concerned.
- Investment in convertible debentures of a company, by each NRI (both on repatriation
and non-repatriation basis) shall not exceed 5% of the paid-up value of convertible
debentures in each series, issued by the company concerned.
- Aggregate investments by NRIs will be subject to a ceiling of (a) 10% of the total
paid-up equity capital of the company concerned: and (b) 10% of the total paid-up
value of each series of convertible debentures issued by the company concerned.
Such Indian companies shall however raise the ceiling of 10% to 24% or such ceilings
a may be decided by the companies, by passing a special resolution in the General
body of the company.
- In case of investments on repatriation basis, the payment for purchase of shares
/ debentures should be by way of debit to the investors NRE account. In case of
investments on non-repatriation basis, the payment for purchase of shares / debentures
shall be by way of debit to the investors NRO account also.
- The net sale / maturity proceeds of shares / convertible debentures, after payment
of taxes, shall be credited only to the investors NRO account if the investment
was made on non-repatriation basis and shall be remitted abroad / credited to the
investor’s NRE / NRO account if the investment was made on repatriation basis.
Following are not covered under the ambit of PIS:
- Securities purchased as a resident individual before becoming an NRI
- Derivative segment transactions or Mutual fund unit purchases
Just like the bank accounts in India, NRIs can have two types of Demat account for
investment purpose - NRE & NRO.
NRE Demat a/c (Investment on Repatriation Basis):
The repatriation of the sale proceeds is allowed if the original purchase was made
on repatriation basis. Means you can take your capital, profits, and dividends in
foreign exchange, which you invested originally in foreign exchange.
NRO Demat a/c (Investment on Non Repatriation Basis):
Through this account one cannot repatriate their investment/capital in foreign exchange.
Means you can get back the proceeds only in Indian rupees, irrespective of the currency
you used to invest in the same. Upon becoming an NRI, the balances held in resident
account should be transferred to the NRO account and securities held under this
account will be treated on non-repatriable basis.
However, repatriation is allowed under the LRS (Liberalized Remittance Scheme) of
RBI. There are limits to how much funds one can repatriate in a given year. The
latest details and amount allowed for repatriation are available on RBI website:
Advantages of Demat account:
- Dematerialization of Physical Shares/Certificates
- Online statement holding facility
- Automatic dividend credit to your bank A/C
- Nomination facility
- Change of address/ Bank flexibility
- Freezing & De-freezing of A/C
Dematerialization of Share Certificates:
Shares listed on Indian stock exchanges have to be purchased / sold in Dematerialized
(Demat) form only. There are many cases where old physical share certificates are
still not dematerialized. The process for this conversion is lengthy as the companies
need to ensure that the real owners of the shares are the ones dematerializing it.
We, at Shah Investor’s Home Ltd, have dedicated highly qualified and experienced
team to guide our customers through this process and convert the shares to demat
form. Please get in touch with us if you have any physical share certificates that
need to be converted to demat form.
In India, your trading account is separate from the account where your securities
are held. This allows for better control and safety of the securities you hold.
Currently, SEC regulations do not allow us to provide Online Trading facility to
the US or Canada based customers. Other customers can go ahead and use our online
trading portal for their transactions.
We have a dedicated NRI desk that can help you with your transactions. You can call
/ email to place your trades through them. There is no extra charge for this personalized
Our NRI desk can also help you build and manage your portfolio for the best risk
adjusted returns. Our proprietary technology to screen and identify fundamentally
strong companies with great growth potential allows our Advisory Desk to consistently
provide market beating returns.
Please visit our Portfolio Advisory page for details or get in touch with firstname.lastname@example.org
At SIHL, buying and selling Mutual Funds is just like buying and selling stocks.
No need to assign any POA to sign physical documents and submit paper cheques.
US and Canada based NRIs have limitation of the AMCs (Asset Management Companies)
they can buy mutual funds from due to SEC requirements. Some AMCs allow purchase
& sale of mutual funds for NRIs from their home country (US or Canada), while others
allow purchase only when the client is visiting India.
All other NRIs have no such restriction and can buy & sell mutual funds regardless
of where they are.
Our Research and Advisory teams continuously monitor more than 5000 available schemes
in India and identify one or two schemes to invest depending upon the investment
style. Some of the parameters we look into before recommending the mutual funds
- Fund manager style, performance and pedigree
- Risk adjusted past performance
- Portfolio theory parameters (Sharpe, Sortino, R-squared, Alpha, Beta, etc)
- Underlying asset quality (fundamental parameters of the stocks held in the scheme)
Please get in touch with email@example.com if you have any questions regarding mutual
funds investment or would like to see our Mutual Fund research report.
IPO is an Initial Public Offer for Investors to invest in Primary Market. It is
the first sale of stock by a private company to the public.
- NRIs can invest in IPO if company has reserved NRI quota.
- NRI can appoint a Power of attorney to fill IPO