A. NRIs can invest in shares and convertible debentures through Portfolio Investment Scheme (PIS) and otherwise:I. PIS:PIS
is a scheme of Reserve Bank of India defined in Schedule 3 of Foreign
Exchange Management (Transfer or issue of security by a person resident
outside India) Regulations, 2000. As per the scheme, NRIs can purchase
and sell shares and convertible debentures of Indian companies through
a registered broker on a
recognised stock exchange by routing such purchase/sale transactions through their account with a designated bank branch.
Individual
NRI cannot purchase more than 5% of the paid up capital of the
company / total paid up value of the convertible debentures of the company
on repatriation as well as on non-repatriation benefits. The overall
ceiling of 10% of the paid up capital / paid up value is applicable for
all the NRI’s put together. NRI can deal with only one designated branch
of the bank at any time.
The aggregate ceiling of 10% may be
raised to 24% if a special resolution to that effect is passed by the
General Body of the Indian company. The tracking of 10% limit is done by
the RBI. RBI starts the caution at 8%.The same is published on RBI
website.
Bank has to upload on daily basis the ASCII file (which
shall contain the details of the PIS transactions undertaken by NRI’s
for the entire Bank) on RBI portal.
II. NRI’s can invest in shares or convertible debentures without limit on Non repatriation basis:NRI
can purchase, without any limit, on non -repatriation basis, shares or
convertible debentures of an Indian company issued whether by public
issue or private placement or right issue.
B. NRIs can invest in securities other than shares and convertible debentures:NRI’s can invest in the below-mentioned securities without the portfolio investment scheme: