RBI Guidelines for NRI investors

  • RBI regulations for NRI / PIO / OCI investors
  • Who is a Non-Resident Indian (NRI)?

    "Non Resident Indian" means a person who is a citizen of India residing outside India for carrying out employment or on business or vocation.

  • Who is a Person of Indian Origin (PIO)?

    A citizen of any country (other than a citizen of Bangladesh or Pakistan) is deemed to be a Person of Indian Origin (PIO), if

    • He, at any time, held an Indian passport, or
    • He or either of his parents or any of his grandparents were a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955, or
    • A spouse (not being a citizen of Bangladesh or Pakistan or Sri Lanka) of an Indian citizen or of a person of Indian origin is also deemed to be PIO
  • What is Overseas Citizen of India (OCI)?

    Overseas Citizenship of India is not a full citizenship of India and thus, does not amount to dual citizenship or dual nationality.The Central Indian Government, on application, may register any person as an Overseas Citizen of India if that Person is of Indian Origin and is from a country which allows dual citizenship in some form or the other & has never been a citizen of Pakistan or Bangladesh.

  • Can NRIs / PIO / OCI invest in shares in India through a stock exchange?

    Yes, they can purchase shares of an Indian Company through stock exchanges, under the Portfolio Investment Scheme (buying through the secondary market).

  • What are the regulations for NRIs / PIO / OCI to invest in India?
    • NRIs / PIO / OCI can invest in the Indian stock market on repatriable or on non repatriable basis through the Portfolio Investment Scheme (PIS).
    • Different bank and demat accounts need to be maintained for repatriable and non repatriable investments.
  • How are the Investment positions of NRIs monitored?

    The Reserve Bank of India (RBI) oversees the investment positions of NRIs/FIIs in listed Indian companies which are reported by designated banks, on a daily basis. Whenever the total holdings of NRIs/FIIs under the scheme reaches the limit of 2% below the sectoral cap, Reserve Bank issues a notice cautioning the designated banks and its branches to take prior approval from the RBI for any further purchases of shares of the particular Indian company. If the shareholding by NRIs/FIIs reaches the statutory limit, the Reserve Bank places the company in the ban list upon which no NRI can purchase the shares of the company under the Portfolio Investment Scheme.

  • What is the limit on the investments that can be made by NRIs in Equity Shares and Debentures in India?

    NRIs are allowed to invest through designated banks (under PINS route) up to 5% of the paid- up capital / paid-up value of each series of equity shares/debentures of listed Indian companies. The overall purchase made by all NRIs cannot exceed 10% or as prescribed by RBI from time to time.

  • Is a Non-Resident Indian required to seek permission from the RBI for investments in Mutual Funds?

    NRI’s need not seek permission from the RBI to invest and redeem units in Mutual Funds.

  • Are NRIs required to take approvals from RBI for selling securities acquired through IPOs/Private Placement?

    No. NRIs can sell such shares/debentures on the exchange without any approval. However, the bank should be provided with the details regarding date of allotment and cost of acquisition while seeking the credit of sale proceeds to NRE/NRO account.

  • What kind of transactions can NRIs make?

    NRIs can only make delivery transactions as per RBI guidelines. Intra-day trading is not allowed for NRIs. Short Selling is not permitted.

  • Bank Guidelines
  • What type of bank accounts can NRIs open in India for investment purposes?

    NRI should open a new bank account (NRE/NRO or both) with a designated bank which is approved by RBI (Reserve Bank of India) for this purpose.

  • What is NRE account?

    Non Resident External (NRE) account is a Rupee denominated account meant for NRIs which allows repatriation of funds. This means that the funds can be freely sent to any other country. NRE account can contain funds remitted from abroad, or obtained from another NRE / FCNR account maintained in India. The interest earned on deposits in an NRE account is exempt from tax in the hands of the NRI.

  • What is NRO account?

    Non Resident Ordinary (NRO) account is a Rupee denominated account which allows repatriation of upto 1 million USD. NRI can repatriate up to USD 1 million, for bonafide purposes, per financial year from balances in NRO Accounts subject to payment of applicable taxes. The limit of USD 1 million per year includes sale proceeds of immovable properties held by NRIs/PIO (Person of Indian Origin) for a period of 10 years. In case a property is sold after being held for less than 10 years, remittance can be made if the sale proceeds have been held by the NRI/PIO for the balance period in eligible investments. The interest earned on deposits in an NRO account is taxable in the hands of the NRI as per the applicable income tax slab rates.

  • Portfolio Investment Scheme
  • What is Portfolio Investment Scheme (PIS)?

    Portfolio Investment Scheme (PIS) is a scheme of Reserve Bank of India which allows Non Resident Indians (NRIs) to purchase/sell shares/convertible debentures of Indian companies on Stock Exchanges. For this purpose, the NRI has to apply to a designated bank, approved by RBI which deals in Portfolio Investment Scheme. All sale/purchase transactions will be routed through this designated bank. At the end of the day, your trades are reported to the respective designated bank, which in turn would report the same to RBI.

  • How many PIS accounts can an NRI open?

    Any NRI or a PIO wanting to trade or make investments in the Indian Equity Secondary Market must have (only) one PIS account with only one designated bank in India. Please note:

    • Only Non Resident Indians require PIS account
    • PIS account is only for facilitating trades in Indian equity markets and not in foreign markets
    • It is not required for making investments in Mutual Funds/IPOs/Derivatives
  • What are the types of PIS accounts?

    There are two types of PIS accounts:

    • NRE PIS account
    • NRO PIS account
  • Why is a PIS required?

    For any Indian company the foreign investment into that company cannot cross a certain limit. This limit is different from company to company and sector to sector. These limits have to be monitored under FEMA regulations.

  • What are the Documents required for reporting transactions under PIS?

    The contract note of the broker should reach PIS department within one working day following the day of transaction for reporting any transaction under PIS.

  • Is PIS account required for investment in all products?

    No. Only the investments made in the secondary markets are to be routed through a PIS account. For other products the investments can be done through direct subscription route.

  • Movement of Funds in NRI Bank Account
  • Can funds be transferred from NRE to NRO account?

    Yes, funds can be transferred from NRE to NRO account without any restriction.

  • Can funds be transferred from NRO to NRE account?

    No, funds cannot be transferred from NRO to NRE account.

  • What happens if the NRI holding the NRE/NRO Accounts returns to India?

    If the NRI holding the NRE account returns and becomes a resident of India, the NRE account is converted into a regular resident account.

  • Under what circumstances can proceeds from investments made under PIS are repatriated?

    The repatriation of the sale proceeds, net of taxes, are allowed if the original investments were made out of funds from NRE account or by means of remittance from abroad.


This FAQ is prepared based on Integrity understanding of SEBI / FEMA regulations /Income Tax Act. While utmost care has been exercised, while developing the FAQs, Integrity does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The readers are requested to keep abreast of the changes taking place in the underlying provisions of FEMA/SEBI regulations / Income Tax Act.