If you’re an NRI looking for the better investing alternatives in India, stocks could be the way to go. After the United States and Japan, India’s stock markets have the world’s third-largest investor base. NRIs can invest in share markets through the Portfolio Investment Scheme account, supervised by the Reserve Bank of India under the Foreign Exchange Management Act.
🧑 Who is an NRI?
You must be a person of Indian origin or an Indian citizen residing abroad to qualify as an NRI (Non Residential Indian). In a given fiscal year, your stay in India should be more than 60 days but shorter than 182. Even if you spent 365 days or more in India in the preceding four financial years, you would still be considered an NRI if you met this requirement. If you are deputed to a foreign nation for more than six months, you can apply for NRI status.
What is Portfolio Investment Scheme Account?
The Portfolio Investment Scheme Account (PIS) allows NRIs to buy/sell shares of Indian companies, in secondary market, under repatriation or non-repatriation basis through a registered stock broking platform on a recognized stock exchange.
How to use PIS Account to Invest in Stock Market?
Like a bank account for Indian residents, the PIS Account contains NRIs’ investment funds and is connected to their Demat and Trading accounts. Resident Indians and NRIs who wish to invest in the share market go through the identical purchasing and selling process. However, any breach of this blacklist will result in severe consequences.
The trading account is credited after the NRI transfers money from his or her NRE account to the broker. When the transaction is complete, the broker sends the contract note to the NRI and the PINS bank at the same time to authorize debits. The NRI’s PINS account will subsequently be debited or credited proportionally by the PINS bank.
What is a Non-Resident External (NRE) Account?
NRE account is an external, repatriable account. This account converts your money into Indian rupees, allowing you to deposit in any currency and withdraw in rupees. An NRE account can be opened in various methods, including savings, current, and recurring deposits – all of which are subject to currency fluctuations.
📈 How can NRIs Invest in Indian Stock Market?
Here are 3 simple ways through which NRIs can buy / sell shares in Indian stock market.
- NRIs can designate a mandate holder to manage their NRE accounts in India and submit the necessary papers to the bank
- They can also appoint a power of attorney to execute and redeem investments in India via a notarized contract
- A stock broking platform may also provide investing and trading services to their NRI clients if they follow all the applicable compliance and KYC criteria
3 Steps to Follow After Opening NRE Account
- You must submit the name of your SEBI-registered broker while registering a PIS account
- The bank will send a PIS approval letter to the broker, which must be sent to the broker
- With the broker, you may now open Demat Account and start trading
Important Information for an NRI Investor
- NRIs cannot trade on an intraday basis in stock markets; they may only trade on a delivery basis
- On the stock exchanges, an NRI can acquire Indian firm shares and convertible debentures, although their total investment is limited
- According to an RBI order, an NRI is also restricted from investing in specific securities and sectors
Now, if you are ready to start investing and trading in the stock market but aren’t sure which stocks to look at, here are a few that you can look at…
- List of Nifty 50 Stocks
- List of Nifty Bank Stocks
- List of Fin Nifty Stocks
- Top 5 Banking Stocks in India
- Top 5 Pharma Stocks in India
- Top 5 EV Stocks in India
We have got some more interesting topics on investing and trading for you that are much talked about.
Happy Investing 😇
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.