Non-Resident Indians are always looking for investment options that will prove beneficial in the long run. If you are too one among them, then portfolio investment scheme is an answer for you!
What is Portfolio Investment Scheme?
Portfolio Investment Scheme (PIS) is basically a Scheme of Reserve Bank of India that helps both Non-Resident Indian (NRI) and Overseas Corporate Body (OCB) to sell and purchase shares and convertible debentures of Indian companies on a documented stock exchange. It allows NRIs to invest in the shares of the Indian companies in the secondary market, under non-repatriation and repatriation basis. It covers a number of securities like bonds, stocks and other types of investment vehicles.
You should know, Portfolio Investment Scheme is all about reducing risks than growing returns. An investment can be easily made under both repatriation and non-repartition basis, but then it is important for the NRI to open a Non-Resident Rupee (NRE) and Non-Resident Ordinary Rupee (NRO) with any of the bank. The sale that is acquired of non-repatriable investment should be collected in NRO account only. Furthermore, it is important for the NRI to have a separate bank account, especially for PIS purposes.
Some of the key features of the NRE portfolio investment in India includes:
• When it comes to investments, it is essential for an NRI to have a PIS account. The same account will be used for investments in the secondary market on repartition basis. When it comes to investments on non-repatriation basis, it is vital to do it directly from the NRO savings bank account. Non-Resident Rupee (NRE) PIS account is independent which can be used by NRIs for their needs. All the sale and purchase transactions are well captured and are further reported by your bank to the RBI.
• It is wise to know that NRIs cannot hold more than one PIS account with multiple banks. An NRI should submit all the original sale and purchase contract notes within 24/48 hours of contract execution to the designated bank with whom your PIS account is maintained.
• Another vital aspect an NRI should know is that all the shares that are purchased on the stock exchange under the portfolio investment scheme cannot be in any case should be transferred by way of sale under private arrangement. Furthermore, it should also not be given as a gift to a person who is a resident of India or outside India without prior permission from the RBI.
• NRIs that hold valid PIS permission can trade in convertible debentures and shares of the Indian companies that are recorded on recognised stock exchanges, whether on repatriation or non-repatriation basis.
• Your PIS account can be operated by your friend or relative only when you avail the mandate of power of attorney facility. This makes easier for your relative or friend to conduct the transactions on your behalf.