Money Matters: All You Need To Know About Portfolio Investment Scheme For NRIs And Its Benefits

In today's interconnected world, investment opportunities transcend geographical boundaries. Non-Resident Indians (NRIs) often seek avenues to invest in their home country while residing abroad. The Portfolio Investment Scheme (PIS) provides a regulated platform for NRIs to invest in the Indian securities market.

The Portfolio Investment Scheme provides NRIs with an easy and regulated method to invest in the Indian stock market, allowing them to participate in the country's economic growth and potentially earn good returns on their investments.

What Is The Portfolio Investment Scheme (PIS)?

The Portfolio Investment Scheme is a facility established by the Reserve Bank of India (RBI) to facilitate investment by NRIs and Persons of Indian Origin (PIOs) in Indian equities and debt securities. Under this scheme, NRIs purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange in India. Here are the key details of the Portfolio Investment Scheme for NRIs:

Who Is Eligible?

As per the Reserve Bank of India,

• Individuals residing outside of India have the opportunity to invest in India, provided they adhere to the Foreign Direct Investment (FDI) Policy established by the Government of India.
• NRIs, residents of Nepal and Bhutan, along with citizens of Nepal and Bhutan, can invest in Indian company shares and convertible debentures under the FDI Scheme on a repatriation basis. However, they must ensure that the investment amount is paid solely through inward remittance in free foreign exchange via normal banking channels. (Investment In Indian Startups: 5 Things NRIs Should Keep In Mind)

How Can NRI Begin Portfolio Investment Scheme?

As per the Ministry of External Affairs, NRIs should abide by the following conditions:

• The NRI selects a specific bank branch to handle all their buying and selling transactions.
• Transactions are conducted through a licensed broker on a recognized stock exchange.
• All transactions within the Portfolio Investment Scheme must be delivery-based. Speculative transactions are not allowed.

Documents Required For Portfolio Investment Scheme

• A copy of the passport
• Proof of Address - both Indian and Overseas
• PAN Card
• NRI Status proof
• Recent passport-size photograph (coloured)
• A duly filled Central Know Your Customer.

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Benefits of Portfolio Investment Scheme For NRIs

• The PIS operates within a well-regulated framework established by the RBI, ensuring transparency, security, and investor protection.
• Investing in Indian equities and debt securities can offer attractive returns over the long term, driven by the country's economic growth prospects and market dynamics.
• This scheme enables NRIs to enter the Indian securities market, providing them with opportunities to invest in both stocks and bonds.
• The Portfolio Investment Scheme streamlines transactions for NRIs, ensuring a smooth, and hassle-free process. However, it's important to note that other methods of acquiring shares fall outside the scope of this scheme.

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How To Register For Portfolio Investment Scheme For NRIs

An NRI planning to take part in the buying and selling of shares or convertible debentures of an Indian company through a registered broker on a recognised stock exchange in India will need to submit a duly filled prescribed form to the designated branch of an Authorised Dealer (AD) bank to participate in the scheme on a repatriation basis. This participation involves opening a Non-Resident External Portfolio Investment Scheme (NREPIS) account.

Source- https://www.mea.gov.in/images/pdf/shares-and-securities.pdf

https://www.rbi.org.in/commonperson/English/scripts/Notification.aspx?Id=1006

Image credit: Freepik

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