An NRE PIS account is a combination of the NRE savings bank account and PIS permission granted by the Reserve Bank of India. With this account NRIs can trade in Indian stock markets on a repatriation basis. The Non-Resident External (NRE) PIS account is compulsory for NRIs who wish to trade or invest in stocks in India, using the income earned abroad.
Since an NRE account is fully repatriable, the account holder can transfer funds in the account to a bank account outside India without permission from the RBI. The fund can also be transferred from NRE account to NRO account.
What is Portfolio Investment Scheme (PIS)?
Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India for NRIs and OCIs. It enables NRIs to purchase and sell shares and convertible debentures of Indian companies on stock exchanges i.e. BSE & NSE by routing such purchase or sale transactions through their NRI savings account with a designated bank branch.
NRE PIS Account – Key takeaways
- NRIs, PIOs and OCIs can open an NRE PIS account.
- All major banks including SBI, ICICI, HDFC, Axis bank and Yes Bank offer NRE PIS accounts
- NRE PIS account enables NRIs to trade in the stock market in India using their foreign earnings.
- An NRI is allowed to have only 1 NRE PIS account. To shift your account to another bank, you have to close the existing NRE PIS account.
- The bank reports all transactions done through an NRE PIS account to the Reserve Bank of India.
- You need to transfer funds to an NRE PIS account to start trading.
- NRIs can authorize a resident Power of Attorney holder to operate this account.
A resident Power of Attorney (PoA) holder can be authorized to operate this account.
How to open NRE PIS account
An NRE PIS account can be opened with any RBI-registered bank offering such services. Major Indian banks like SBI, ICICI, HDFC, Axis and Yes Bank, etc. offer NRE PIS accounts for non-residents.
First of all, the bank opens an NRE savings account and then requests for PIS permission on it based on the PIS application form submitted by the NRI. Once PIS permission is granted, it is linked with the NRE account and known as an NRE PIS account.
The Reserve Bank of India has authorized designated branches of some major banks to issue permission for Portfolio Investment Scheme.
The NRE PIS account is linked with NRI Demat account and NRI trading account, which is popularly known as 3-in-1 NRI account, for trading and investments. The interest and dividend earnings are automatically credited in the NRE PIS bank account and all transactions are reported to the Reserve Bank of India. NRIs should use this account only for investment in the stock market in India.
Living away from India, it is not easy for NRIs to open an NRI Trading account (NRE PIS or NRO Non-PIS account) or Demat account and make the right decision about investment in India. At SBNRI, we understand that there are many obstacles faced by NRIs while investing in India. You can download SBNRI App to connect with our experts and get end-to-end assistance related to an NRI investment.
No. A PIS account can’t be held jointly.
No. NRIs can’t maintain NRE PIS accounts with different authorized dealers. You can open the account with only one designated bank for the purpose of routing transactions under NRE PIS.
Yes. The bank issues approval on receipt of prescribed form.
Yes, NRIs can purchase up to 5% of the paid up capital of a company and maximum of 5% of paid up capital value of each lot of debentures under repatriation basis. In case of any particular company, where permitted, NRIs can hold up to a maximum of 10% of such holding or higher percentage.
Shares/ debentures acquired through the primary market are outside the purview of above limits.
They need to off loach such portion of the holding exceeding the prescribed limit.
The sale proceeds can be repatriated if the original purchase was on repatriation basis and the investment was made from an NRE/ FCNR account or by way of inward remittance from abroad. The sale proceeds can’t be repatriated if the original purchase was made from an NRO account.
NRI can appoint only one designated bank for routing transactions under portfolio investment scheme.
No, short selling is not allowed under PIS. To sell them, NRIs need to take delivery of shares/ convertible debentures purchased.
Yes, NRIs must route all secondary market transactions i.e. for purchase/ sale of stocks through their PIS designated account.