Investment under Portfolio Investment Scheme.

1          Non Resident Indians being Indian citizens as also Foreign citizens of Indian origin [ PIO ] can purchase shares and /or debentures of Indian companies listed on a recognised stock-exchange through a member thereof under the "Portfolio Investment Scheme". This facility is available both on repatriation as also on non-repatriation basis.  .

2          By virtue of these Regulations, only individual NRIs are permitted to invest in shares and / or convertible debentures of Indian company carrying on almost any kind of business in India barring a few cases.

3          Earlier, an Overseas Corporate Body (OCB) was also permitted to make portfolio investments but the Reserve Bank of India has, since , prohibited OCBs to make any further investments under the said Scheme.
 

1.         Eligible investor : An NRI Individual.

2.         Permissible activity : For an NRI :Purchase and / or sale of shares / convertible debentures of Indian company on recognised Stock Exchange.
For an OCB : for limited purpose of selling shares / convertible debentures of Indian company held as on 29.11.01 by said OCB on recognised Stock Exchange.

3.         Procedure / requirements : on repatriation / non repatriation basis :

(1)       Only one specific bank branch being authorised to offer portfolio investment facility should be designated .

(2)       For repatriation benefits the investment should be made through :

.01           Non Resident External account - [NR(E)] or

.02           Foreign Currency Non Resident (B) account - [FCNR(B)] or

.03           Foreign Exchange Remittance from abroad.

(3)       In case of non repatriation the investment should be made through :

.01           Non Resident External account - [NR(E)] or Foreign Currency Non Resident (B) account - [FCNR(B)]  or Foreign Exchange Remittance from abroad or 

.02           Non Resident Ordinary account - [NRO] 

(4)       The investor should take / give delivery of shares purchased / sold and thus cannot square off a trade without delivery. 

(5)       An NRI can not purchase securities exceeding 5 % of total paid up value of the company concerned.
Aggregate investment by NRIs should not exceed 10 % of paid up value (this limit may be raised to 24 % if the company has  passed a special resolution to that effect.)

4.         Remittance of sale proceeds :

(1)       Net sale value (after payment of taxes ) can be repatriated out of India / credited to NRE / FCNR/ NRO account if  the shares are purchased on repatriation basis.

(2)       Net sale value (after payment of taxes ) can be credited to NRO account if shares are purchased on non-repatriation basis.A

(3)       The amount invested in shares or convertible debentures under this Scheme on non-repatriation basis normally cannot  be repatriated abroad , however now under the liberal remittance scheme,  balance held in NRO account can be remitted / repatriated abroad upto US$ 1 mn  per financial year.