| Here's investing in Mutual Funds could prove
to be a good financial decision: |
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Who is an NRI? |
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- An NRI is an Indian citizen who stays outside India.
a. For purposes of carrying out employment or any business
or vocation.
b. Under circumstances indicating an intention to stay
outside India for an uncertain duration.
- Any Indian citizen deputed outside India for a temporary
period in connection with employment.
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Who is a PIO? |
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A citizen of a foreign country (other
than a citizen of Bangladesh or Pakistan) is a PIO if:
- He/She at any time held an Indian Passport OR
- He/She or either of his parents or any of his/her
grandparents was a citizen of India OR
- Spouse (not being a citizen of Bangladesh or Pakistan)
of an Indian citizen (a) or (b) above.
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What are the products offered
to NRI? |
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NRI can invest in the following products.
- Equity trading on BSE and NSE
- Derivatives trading on the NSE
- IPO online
- Portfolio Management
- Investments in Mutual Funds
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What steps
an NRI needs to take to start investing in the Indian
Stock Market? |
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- An NRI should open a new bank account (NRE/NRO or both)
with designated bank which is approved by RBI (Reserve
Bank of India) for this purpose.
- He should apply for a general approval for investment
in Indian Stock Market through his designated bank branch.
- He should open a Demat Account with an NBFC to hold
his shares and register to execute his buy/sell orders
on the stock exchange(s).
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What type
of saving bank account(s) can be opened by an NRI or
PIO in India? |
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Any NRI/PIO can open two types of savings accounts with
any bank in India. They are NRE and NRO bank accounts. |
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What is a NRE account? |
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A NRE bank account is an external saving bank account opened
for Non resident Indians. This is why it is known as Non-Resident
External account. Since it is an external account, any monies
lying in NRE account can be taken outside the country or
in other words, the monies lying in NRE account are fully
repatriable. This money can be converted into any foreign
currency at the behest of the account holder and can be remitted
outside the country. |
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What is a NRO account? |
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A NRO bank account is an ordinary saving bank account opened
for Non resident Indians. This is why it is known as Non-Resident
Ordinary account. Since it is an ordinary account i.e. as
good as a normal saving bank account, monies lying in NRO
account cannot be taken outside the country or in other words,
the monies lying in NRO account are not repatriable. |
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Can money be transferred from
NRE account to NRO account? |
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Yes money can be freely transferred from NRE account to
NRO account. |
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Can money be transferred from
NRO account to NRE account? |
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No, money cannot be transferred from NRO account to NRE
account. |
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What is the status of NRO/NRE
accounts on the return of the account holder to India? |
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RBI has advised banks to re-designate such accounts as
resident accounts on return of the account holder to India. |
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In case a resident Indian becomes
a non-resident, will he/she be required to change the status
of his/her holding from Resident to Non-Resident? |
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As per section 6(5) of FEMA, NRI can continue to hold the
securities, which he/she had purchased as a resident Indian,
even after he/she has become a non-resident Indian, but has
to transfer the shares to his NRO (Non Resident Ordinary)
account |
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Can NRIs invest in shares,
debentures and units of Mutual Funds in India? |
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NRIs are permitted to make direct investments in shares/
debentures of Indian companies/ units of mutual fund. They
are also permitted to make portfolio investments i.e . purchase
of share / debentures of Indian Companies through stock exchange.
These facilities are granted both on repatriation and non-repatriation
basis. |
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NRIs subscribe to public issues?
What are the permissions/approvals required? |
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Yes. The issuing company is required to issue shares to
NRI on the basis of specific or general permission from GOI/RBI.
Therefore, individual NRI need not obtain any permission. |
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Does an NRI require any permission
to receive bonus/rights shares? |
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No |
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What is PIS? |
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Portfolio Investment Scheme (PIS) is a scheme of the
Reserve Bank of India (RBI) defined in Schedule 3 of Foreign
Exchange Management Act 2000 under which the 'Non Resident
Indians (NRIs)' and 'Person of Indian Origin (PIOs)' can
purchase and sell shares and convertible debentures of
Indian Companies on a recognized stock exchange in India
by routing all such purchase/sale transactions through
their account held with a Designated Bank Branch.
Any NRI or a PIO wanting to trade/make fresh investments
in the Indian Equity Secondary Market needs and must have
one PIS account with only one designated bank in India.
Notes:
- PIS account is applicable only for NRIs and not
for resident Indians.
- It is only for trading in Indian markets and not
any other foreign markets.
- It is applicable only for equity trades and not
MF investments.
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What are the types of PIS account? |
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There are two types of PIS account:
- NRE PIS account
- NRO PIS account
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Why is PIS required? |
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For all the Indian companies or companies
listed on Indian stock exchanges, there are certain limits
which have to be monitored under FEMA regulations. For
any company the foreign investment into that company cannot
cross certain limit. This limit is different from company
to company and sector to sector. Also individually any
NRI or a PIO cannot invest more than 5% in any Indian company. |
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How many
PIS account can a NRI open? |
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NRI/PIO can open only one PIS account
with any designated banks (Preferred bank – UTI Bank)
in a prescribed format for PIS account, upon which the
bank can issue a PIS approval letter to the investor. |
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Can I invest in all products
through PIS account? |
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No. Any investment done in secondary
market should be routed through a PIS account. For other
products the investment can be done through direct subscription
route. |
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What is a NON PIS Account? |
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It is a normal savings bank account
which can be opened with any bank in India. Non-PIS is
an account for which the transactions are not reported
to RBI. This account takes care of selling all those shares
which are not allowed under PIS. Shares acquired under
IPO or received as gift or bought as resident Indian can
be sold under Non-PIS account. |
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What are the types of NON PIS
Account? |
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There are two types of NON PIS account
- NRE NON PIS account
- NRO NON PIS account
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What type of transactions is
allowed under NON PIS account? |
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- Sale of shares which were acquired other than PIS.
- Shares acquired through IPO's.
- Gifts from relatives or otherwise.
- Shares bought as resident Indian.
- Fresh acquisition through IPO's.
- Investment in Mutual Funds.
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What is meant by investment
through direct subscription route? |
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As per the regulations NRIs are allowed to invest up to
a certain percentage of the total paid up capital of the
company by directly subscribing to the equity/convertible
debentures of the company either though a public offering
made by the company or through private placements on one
to one basis. Regulations provide for different ceilings
on such investments based on the industry to which the company
belongs and also the nature of investments (repatriation
/ non-repatriation basis). |
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Do investments made through
IPO's or Private placements come under PIS? |
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No. Investments made by NRIs though subscription to Initial
Public Offerings (IPO's) or Private placements are not covered
by Portfolio Investment Scheme. Such investments are covered
by RBI's regulations with regard to Foreign Direct Investments. |
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Do NRIs need any permission
of RBI to subscribe for IPO's or Private placements of
equity shares/convertible debentures of existing or new
companies? |
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No. NRIs do not require any permission to invest though
Initial Public Offerings (IPO's) or Private placements. In
such cases, the Issuing Company should comply with all necessary
regulations for issuing securities to a person resident outside
India. |
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Do NRIs need approvals from
RBI for selling securities acquired through IPO's/Private
Placement? |
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No. NRIs can sell such shares/debentures on the Exchange
without any approval. However, while seeking the credit of
sale proceeds to NRE/NRO account, the bank should be provided
with the details regarding date of allotment and cost of
acquisition to calculate the taxes, if any. |
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Can an
NRI have investments under PIS on repatriation and non-repatriation
basis? |
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Yes. Investment can be made on repatriation as well as
non-repatriation basis. However, an NRI will have to open
NRE account as well as NRO account with designated bank branch
as the sale proceeds of non-repatriation investment can only
be credited to NRO account. |
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Under what circumstances can
investments made under PIS are repatriated? |
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The repatriation of the sale proceeds, net of taxes, are
allowed if the original purchase was made on repatriation
basis and such investments were made out of funds from NRE/FCNR
account or by means of remittance from abroad. |
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What are the provisions for
corporate benefits for investment on repatriation and non-repatriation
basis? |
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Corporate benefits may be in the form of dividend, interest,
rights, bonus, etc. Any corporate benefit resulting out of
investment in securities on non-repatriation basis will not
carry the right of repatriation. Similarly any corporate
benefit resulting out of investment in securities on repatriation
basis will carry the right of repatriation. This is subject
to change depending on prevailing RBI regulations. |
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Where can an NRI/PIO open a
demat account? |
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NRI/PIO needs to open a demat account with an NBFC as explained
above. |
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Can investments made under
different schemes be held under a single demat a/c? |
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No. Securities received against investments under 'Foreign
Direct Investment scheme (FDI)', 'Portfolio Investment scheme
(PIS)' and 'Scheme for Investment' on non – repatriation
basis have to be credited into separate demat accounts. Investment
under PIS could be on repatriation or non – repatriation
basis. Investment under FDI scheme is on repatriation. |
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What is the procedure of Dematerialization? |
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Client submits a DRF form along with the physical share
certificate to NBFC, who in turn forwards it to the Registrar &
Transfer agent for confirmation from the company. After the
confirmation is received the client a/c is credited. |
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What is
TDS? |
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As per regulatory guidelines, Tax (if applicable) has to
be deducted at source for all the profits done in the equity
market transactions. Before crediting sales proceeds it is
the responsibility of the broker and the PIS cell to determine
the appropriate Tax and deduct it at source. |
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What are
the types of rates applicable? |
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TDS rate is different as per the tenure of the investment.
It can be classified into
- Long-term capital gain
– If the period of holding is more than 1 year
i.e. the difference between the date of purchase and
sell is more than 1 year, then the TDS rate applicable
is 0 %. Before 1st Oct 2004 this rate was 10% now it
is tax-free.
- Short-term capital gain - If the period of holding
is less than 1 year i.e. the difference between the
date of purchase and sell is less than 1 year, then
the TDS rate applicable is 10%. Before 1st Oct 2004
this rate was 30%.
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How is
TDS computed? |
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TDS is computed on the profit amount or the gain as per
the applicable rate i.e. short term or long term on a First-In,
First-Out (FIFO) basis. |
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How the TDS deducted and money
is transferred to the bank account? |
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For any TDS to be deducted and money
to be remitted to bank account, there are three things
which have to be verified.
1. Amount of gain = Selling price – Purchase price
2. Duration of holding i.e. long term or short term = Selling
date – Purchase date
3. Source of fund for purchase i.e. NRE or NRO
Important: TDS is deducted only at the time of crediting
sales proceeds.
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What is
PMS? |
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Portfolio Management Services provides
the benefits of diversification across assets, sectors,
and funds. The experts in Portfolio Management combine
best of breed investment of avenues as they aim to achieve
optimal returns at managed levels of risk. It is transparent
collective investments. |
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What is
Mutual Fund? |
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A mutual fund is nothing more than a collection of stocks
and/or bonds. You can make money from a mutual fund in
three ways:
- Income is earned from dividends on stocks and interest
on bonds. A fund pays out nearly all income it receives
over the year to fund owners in the form of a distribution.
- If the fund sells securities that have increased
in price, the fund has a capital Gain. Most funds also
pass on these gains to investors in a distribution.
- If fund holdings increase in price but are not sold
by the fund manager, the fund's shares increase in
price. You can then sell your mutual fund shares for
a profit.
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How do I invest in Mutual Funds? |
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You can invest in Mutual Funds through NON PIS account. |
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How much is the risk involved
while investing in Equity Investments? |
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Equity investments are subject to market risks and there
is no assurance or guarantee that the objective of the portfolio
management service will be achieved. As with any investment
in securities, the net asset value of the managed portfolios
can go up or down depending on the factors and forces affecting
capital markets. Past performance of the portfolios does
not indicate the future performance. |
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What is International Equity
Commodity? |
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International Equity division provides an opportunity for
investors to scale up their investment horizon, by tapping
into International Equity and Commodities markets. |
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| Do Contact Us for more details. |
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