An NRI is an Indian citizen who stays outside India. For purposes of carrying out employment or any business or vocation, under circumstances indicating an intention to stay outside India for an uncertain duration and Any Indian citizen deputed outside India for a temporary period in connection with employment.

• A citizen of a foreign country (other than a citizen of Bangladesh or Pakistan) is a PIO if:
• He/She at any time held an Indian Passport OR
• He/She or either of his parents or any of his/her grandparents was a citizen of India OR
• Spouse (not being a citizen of Bangladesh or Pakistan) of an Indian citizen (a) or (b) above

• An NRI should open a new bank account (NRE/NRO or both) with designated bank which is approved by RBI (Reserve Bank of India) for this purpose.
• He should apply for a general approval for investment in Indian Stock Market through his designated bank branch.
• He should open a Demat Account with an NBFC to hold his shares and register to execute his buy/sell orders on the stock exchange(s).

Any NRI/PIO can open two types of savings accounts with any bank in India. They are NRE and NRO bank accounts.

A NRE bank account is an external saving bank account opened for Non resident Indians. This is why it is known as Non-Resident External account. Since it is an external account, any monies lying in NRE account can be taken outside the country or in other words, the monies lying in NRE account are fully repatriable. This money can be converted into any foreign currency at the behest of the account holder and can be remitted outside the country.

A NRO bank account is an ordinary saving bank account opened for Non resident Indians. This is why it is known as Non-Resident Ordinary account. Since it is an ordinary account i.e. as good as a normal saving bank account, monies lying in NRO account cannot be taken outside the country or in other words, the monies lying in NRO account are not freely repatriable unless certification from a Chartered Accountant is obtained.

Yes money can be freely transferred from NRE account to NRO account.

No, money cannot be transferred from NRO account to NRE account.

TDS rate is different as per the tenure of the investment. It can be classified as:

• Long-term capital gain – If the period of holding is more than 1 year i.e. the difference between the date of purchase and sell is more than 1 year, then the TDS rate applicable is 10 % if the gain is more than Rs 1 Lakh.
• Short-term capital gain - If the period of holding is less than 1 year i.e. the difference between the date of purchase and sell is less than 1 year, then the TDS rate applicable is 15%.

NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.

Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the 'Non Resident Indians (NRIs)' and 'Person of Indian Origin (PIOs)' can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch. Any NRI or a PIO wanting to trade/make fresh investments in the Indian Equity Secondary Market needs and must have one PIS account with only one designated bank in India.

• PIS account is applicable only for NRIs and not for resident Indians.
• It is only for trading in Indian markets and not any other foreign markets.
• It is applicable only for equity trades and not MF investments.

For all the Indian companies or companies listed on Indian stock exchanges, there are certain limits which have to be monitored under FEMA regulations. For any company the foreign investment into that company cannot cross certain limit. This limit is different from company to company and sector to sector. Also individually any NRI or a PIO cannot invest more than 5% in any Indian company.

As per the regulations NRIs are allowed to invest up to a certain percentage of the total paid up capital of the company by directly subscribing to the equity/convertible debentures of the company either though a public offering made by the company or through private placements on one to one basis. Regulations provide for different ceilings on such investments based on the industry to which the company belongs and also the nature of investments (repatriation / non-repatriation basis).

No. NRIs can sell such shares/debentures on the Exchange without any approval. However, while seeking the credit of sale proceeds to NRE/NRO account, the bank should be provided with the details regarding date of allotment and cost of acquisition to calculate the taxes, if any.

NRI/PIO needs to open a demat account with an NBFC as explained above.

No. Securities received against investments under 'Foreign Direct Investment scheme (FDI)', 'Portfolio Investment scheme (PIS)' and 'Scheme for Investment' on non – repatriation basis have to be credited into separate demat accounts. Investment under PIS could be on repatriation or non – repatriation basis. Investment under FDI scheme is on repatriation.

Client submits a DRF form along with the physical share certificate to NBFC, who in turn forwards it to the Registrar & Transfer agent for confirmation from the company. After the confirmation is received the client a/c is credited.