Definition of a NRIs / PIOs
Who is a ‘Non Resident Indian (NRI)’?
A person who does not reside in India for more than 182 days in any preceding financial yearNon Resident Indians is also someone who fall under the following broad categories:
Indian citizens who stay abroad for employment or for carrying on a business or vocation or for any otherpurpose in circumstances indicating an indefinite period of stay outside India.
Indian citizens working abroad on assignments with foreign Governments/government agencies orInternational/Regional Agencies like the UNO, IMF, World Bank, etc.
Officials of the Central and State Governments and Public Sector Undertakings deputed abroad ontemporary assignments or posted to their offices (including Indian Diplomatic Missions) abroad.
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 of Indian origin, if,
he, at any time, held an Indian passport, or
he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution ofIndia or Citizenship Act, 1955 ,or
Spouse (not being a citizen of Bangladesh or Pakistan or Sri Lanka) of an Indian citizen or of a person ofIndian origin is also deemed to be PIO.
NRI Investments in India – General Regulatory Framework
Can an NRI make investments in the Indian companies?
NRIs are allowed to invest in India companies under the Portfolio Investment Scheme (buying through thesecondary market) and through the Direct Subscription route (Investments though IPOs/Private Placements).
Portfolio Investment Scheme
What is the Portfolio Investment Scheme?
Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 ofForeign Exchange Management Act 2000 under which the ‘Non Resident Indians (NRIs)’ and ‘Person of IndianOrigin (PIOs )’ can purchase and sell shares and convertible debentures of Indian Companies on a recognizedstock exchange in India by routing all such purchase/sale transactions through their account held with aDesignated Bank Branch ( Authorized Dealer - AD)
Steps for an NRI to Investments in Indian stock markets?
An NRI should open a new NRE /NRO savings bank account with designated bank (AD) branch which isapproved by RBI (Reserve Bank of India) for this purpose.
He/ She should apply for a general approval for investment in Indian Stock Market through hisdesignated bank branch (PIS approval).