regulations for nri portfolio investments
NRIs are permitted to make portfolio investment in shares/debentures (convertible and non-convertible) of Indian companies, with or without repatriation benefit provided the purchase is made through a stock exchange and also through designated branch of an authorised dealer. NRIs are required to designate only one branch authorised by Reserve Bank for this purpose.
GENERAL CONDITIONS FOR PURCASE WITH REPATRIATION OF NON-REPATRIATION RIGHTS
- Investment in equity shares and convertible debentures is permitted subject to an overall ceiling of (a) 10 per cent of the total paid-up equity capital of the company concerned; and (b) 10 per cent of the total paid-up value of each series of the convertible debentures issued by the company concerned for all NRIs taken together both on repatriation and on non-repatriation basis.
- The purchase of shares and debentures under the scheme is required to be made at the ruling market price.
- Indian companies listed on recognised stock exchanges in India are however permitted to allow NRIs to acquire shares/debentures up to 24% instead of the 10% limit after a resolution in General Body and necessary information to RBI.
INVESTMENT ON NON-REPATRIATION BASIS
NRIs intending to invest on non-repatriation basis should submit the application in form NRI and NRC respectively, to a designated branch of an authorised dealer. Authorised Dealer will grant general permission to purchase shares/debentures to NRI subject to the condition that the payment for such investment is received through inward remittance or from the investor’s NRE/FCNR/NRO Account.
Securities acquired by NRIs under PI scheme on a non-repatriation basis can be sold without any permission on the floor of a stock exchange.
Dividend and interest income is fully repatriable
INVESTMENT ON REPATRIATION BASIS
NRIs intending to invest with repatriation benefits should submit the application to the designated branch of authorised dealer. AD will grant to NRI for purchase of shares/debentures subject to the conditions that-
- The payment is received through an inward remittance in foreign exchange or by debit to the investor’s NRE/FCNR account.
- Investment made by any single NRI investor in equity/preference shares and convertible debentures of any listed Indian company does not exceed 5% of its total paid-up equity or preference capital or 5% of the total paid-up value of each series of convertible debentures issued by it.
- NRIs take delivery of the shares/convertible debentures purchased and give delivery of the shares/convertible debentures sold under the Scheme.
NRIs can freely sell securities acquired by tem with repatriation benefits, without any permission, through a stock exchange. Dividend and interest income is also fully reportable.
INVESTMENT IN THE UNITS OF DOMESTIC MUTUAL FUNDS ON NON-REPATRIATION/REPATRIATION BASIS
Same procedure as indicated in paragraphs for Investment on Non-Repatriation Basis and Repatriation Basis above is applicable. However, approvals already ranted for portfolio investment in shares/debentures of Indian companies will also be valid for purchase of units of domestic mutual funds.
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