Neena Bajpai asked on 13/02/2023

What is a PIS account?

answered on 15/02/2023

The Portfolio Investment Scheme (PIS) account holds the investment amount of the NRI. The purchases are directly debited from this account, and the earnings are credited to the account. The PIS permission letter is required for opening a demat (for holding stocks in electronic form) and trading account (account with a registered broker for trading in the market) that is issued by the banks. PIS Bank Accounts are essential for investment in the secondary market (stock market) as they are used to maintain and track the investment caps for NRIs as established by the Reserve Bank of India. (An NRI can not invest more than 10% of the paid-up value of shares of an Indian Company)


NRIs can purchase and sell shares and debentures of Indian companies on a recognized stock exchange using their PIS Accounts. 


The PIS Accounts can be opened at designated branches of all the major banks in India and through third party providers such as Zerodha to ease out your investments in shares. You either need to visit the designated bank branch in India or send the required documents to that branch in India or the third party providers like Zerodha via courier in order to open the PIS Account.


The documents required for a Portfolio Investment Scheme (PIS) account for NRIs are:

    • Copy of valid passport (pages with your name, address, date of birth, date and place of issue, expiry date, photograph, address, signature)
    • Proof of NRI status (by way of valid Employment/Residence Visa copy or Work/Residence Permit)
    • Copy of Indian PAN card
    • Proof of Overseas and Indian Address
    • Recent passport size colour photograph

There are certain restrictions for NRIs while investing in the share market using their PIS Accounts in India, which are:

    • An NRI cannot transact in India except through a stock broker. 
    • NRIs cannot trade shares in India on a non-delivery basis*, that is, they can neither do day-trading nor short-sell in India. If they buy a stock today, they can only sell it after two days.
    • NRIs must carry out all the purchase/sale from one designated bank branch only
    • There are certain ceilings NRIs are bound to:
      • 5% of the paid-up value of shares of an Indian Company each for repatriable and non-repatriable basis which means that the maximum ceiling per Indian Company for all NRIs will be 10%, which can be increased to 24% if the company passes a resolution for the same

Basic term definitions:

  • Non-Delivery Basis: Delivery means you buy the stock but “hold” it overnight. In the cash segment, you have to wait for two business days after the transaction to receive the actual delivery. Eg: If you bought on Tuesday, then you get the delivery on Thursday after closing. Non-delivery means you sell on the same day when you buy (Also called “day trading“). Eg: You buy a stock on Tuesday and sell it on Tuesday.
  • Short-Selling: Short selling is a method of borrowing stocks and selling them in the open market and then rebuying the same stocks at a lower price. The strategy here is to benefit from the falling prices of the stocks.

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