ULIPs and mutual funds are two popular yet distinct investment avenues, each coming with its unique set of benefits and drawbacks. Know which one is better for your individual needs and preferences.
Invest smart today for a better tomorrow
Investing in stock exchanges and trades has gained remarkable traction in recent times, drawing attention from individuals worldwide. A significant advancement is the provision that now enables Non-Resident Indians (NRIs) to participate in the buying and selling of shares and debentures of Indian companies.
To make such investments, it is necessary to open a PIS account for NRI first. The Portfolio Investment Scheme (PIS) is a pathway for NRIs to invest in Indian stock exchanges, provided they strictly adhere to Government regulations.
But what is PIS account and how can one open it?
In this article, we will explore the full form of PIS, its definition, distinctive features, eligibility prerequisites, the documents required to open the account, and various other associated aspects. With all this information, we will simplify the complexities involved in a PIS account for potential NRI investors.
The Portfolio Investment Scheme (PIS) was established by the Reserve Bank of India (RBI) to help Non-Resident Indians (NRIs) invest in Indian stocks and bonds conveniently. It operates under Schedule 3 of the Foreign Exchange Maintenance Act, 2000, ensuring stringent oversight of all investments in the stock market, whether they are credits or debits.
To start investing under this scheme, NRIs are required to set up a PIS-enabled NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account with any bank designated for this purpose.
Investments made through PIS can be on a repatriation basis, where the investor can transfer funds back to their home country, or on a non-repatriation basis, where the funds remain in India. This scheme simplifies the investment process for NRIs while guaranteeing compliance with all the requisite legal and financial norms.
The PIS account provides remarkable benefits to Non-Resident Indians (NRIs) who wish to invest in the Indian stock market. This account not only simplifies the investment process but also provides a regulated pathway for investing in a range of financial instruments.
Here are some advantages that come with having a PIS account -
A Portfolio Investment Scheme (PIS) account provides several key benefits to Non-Resident Indians (NRIs) that go beyond facilitating investments in the Indian stock market. Here’s a straightforward breakdown of some of these additional advantages:
1.) Ease of Transactions: For NRIs, managing physical transactions can be challenging. A PIS account mitigates this and provides a seamless transaction experience within the established rules and regulations.
2.) Value-Added Service – Enhanced Set-off Facility: Tailored to suit NRIs, the PIS account comes with an Enhanced Set-off facility that allows NRIs to save on Capital Gains Tax by offsetting current losses against future profits.
Here’s how it works:
3.) Cost-Efficient Transactions: Since all stock investment transactions are necessarily routed through the PIS account, the transaction costs are kept to a minimum. This is another feature that makes it an attractive option for investment.
As we saw earlier, a Portfolio Investment Scheme (PIS) account facilitates seamless investment in the Indian stock market for Non-Resident Indians (NRIs).
But how does this specialised account operate?
Here’s a simplified explanation of how the PIS account works for interested NRIs -
Opening a PIS account allows Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) to invest in Indian stock markets.
However, it is crucial to understand who qualifies for this account as per the Reserve Bank of India (RBI) guidelines. There are specific limitations and exclusions in place, so that only eligible individuals can avail of this scheme.
|Non-Resident Indians (NRIs)||Residents traveling abroad for medical treatment or short trips|
|Persons of Indian Origin (PIO)||Residents of Bangladesh and Pakistan without prior RBI permission|
|-||Residents of Nepal and Bhutan|
|-||Mariners employed by Indian shipping companies|
Note: It’s essential for prospective applicants to thoroughly review these criteria to determine their eligibility before proceeding to open a PIS account for a smooth and compliant investment journey in the Indian financial markets.
Keep the following documents ready while opening a PIS account –
In addition to the above documents, a Person of Indian Origin (PIO) will be required to submit the following documents as well -
When utilising a Portfolio Investment Scheme (PIS) account, it’s important to be aware that certain charges are associated with its services. These charges are bank-specific and can vary, so it’s essential to confirm the details with your respective bank.
Here are some of the typical fees involved with a PIS account for NRIs-