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There had been always been complaints from the NRI community regarding their inability to purchase securities at the Indian Stock market. In order to resolve this problem, the Reserve Bank of India came out with a NRI Portfolio Investment Scheme to enable them to make investment in the Indian stock market through a recognized stock exchange in India.
Non-Resident Indian (NRI) portfolio investment scheme is a scheme of Reserve bank of India (RBI) that enables NRIs and Overseas Corporate Bodies (OCBs) to purchase and sell shares and convertible debentures of Indian companies on a recognised stock exchange by routing such purchase or sale transactions through their NRI Savings Account with a designated bank branch.
As per section 3 of the Foreign Exchange Management Act 2000, NRIs are allowed to buy and sell shares along with the convertible debentures of companies incorporated in India through a recognised stock exchange by directing these transactions through account with a designated bank branch. The PIS investment scheme was designed by the RBI to enable the NRIs to make such investments.
Following are some of the features of the NRI Portfolio Investment Scheme:
If an NRI wishes to participate in the process of purchase and sale of shares through a recognised stock exchange, then that NRI needs to open a bank account at a designated bank which has a global presence.
It must be made clear that investments made by the NRIs can be done both through a repatriation basis or a non-repatriation basis.
Following are the facilities offered by the NRI Portfolio Investment Scheme:
Following are some of the restrictions that NRI Portfolio Investment Scheme has put on the NRIs:
RBI with the introduction of NRI Portfolio Investment Scheme[1] has tried to resolve the problem where they were not able to make investments in Indian securities. However, RBI has not given freehand and prescribed limits to the amount of investments that can be made by the NRIs to protect the stock market from malpractices like short selling.
Read Our Article: NRI Investment in Private Limited Company
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