NRI Investment in India in Indian Stock Markets & Shares

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With a large chunk of Wealthy Indians preferring to settle outside India, there is immense capital in the pockets of these NRI’s. The NRI Community is one of the richest communities of Expats in the World.

With NRI’s growing in all spheres of life a large chunk of money is parked with these NRI’s who are always on the lookout for good Investment Opportunities. And India perfectly meets the requirements of these NRI’s.

With India now inviting NRI Investment in India, NRI’s have now started investing in India in Big Numbers. A major chunk of this NRI Investment in India either goes in Real Estate or Fixed Deposits or Stock Markets. In this article we would mainly be focussing on NRI Investment in India in Stock Markets. For NRI Investments in Real Estate and Fixed Deposits, kindly refer:-

With the Indian economy growing rapidly, the above mentioned instruments are yielding an impressive return for NRI Investment in India. Moreover, these NRI’s also feel a sense of belongingness to the country to which they belong and therefore their preference for Investing in India is also on a higher side.

nri-investment-in-india

To promote NRI investment in India, the Govt has streamlined the procedure for Investing in India and in this article we would be discussing about NRI Investment in India in Stock Markets and Shares of Indian Companies.

NRI Investment in India in Stock Markets

NRI Investment in India in Shares of Indian Companies is allowed by RBI. However, as these Indians are not Resident Indians – these NRI’s will have to approach an Authorised Dealer (Bank) authorised by the Reserve Bank of India to administer  the Portfolio Investment Scheme (PIS) to open a NRE (Non Resident External)/ NRO (Non-Resident Ordinary) Account under the Scheme for routing the Investments.

Documents Required for Opening NRI Share Trading Account

  1. Documents ensuring Status of entity – Valid Passport, Place of Birth as India, Valid Visa
  2. Portfolio Investment Scheme Permission Letter from respective designated Bank
  3. PAN Card
  4. Overseas Address – Driving License/ Foreign Passport/ Utility Bills/ Bank Statement
  5. Photograph of the Investor
  6. Proof of Respective bank Accounts & Depository Accounts

Power of Attorney in favour of the Bank by NRI

Specific Power of Attorney may be granted in favor of the Bank to carry out formalities in respect of:-

  1. Applying to RBI for approvals, if necessary
  2. Buying and Selling shares and Debentures
  3. Subscribing to new issue of Shares and Debentures
  4. Collecting Dividend and Interest
  5. Holding Shares and Debentures in Safe Custody
  6. Renunciation of Right Entitlement
  7. Arranging for Repatriation if the Investment is repatriable

Speculation Barred

The NRI should take delivery of the shares purchased and give delivery of the shares sold. In other words, speculation in terms of margin trading or short selling is not allowed.

NRI Investment in India: Maximum Limit for Investing in Shares

  1. NRI’s can invest through designated Authorised Dealers, on repatriation and non-repatriation basis under the PIS Route up to  5% of the Paid up capital/ paid up value of each shares of debenture of listed Indian companies
  2. The aggregate paid up value of shares/ convertible debentures purchased by all NRI’s cannot exceed 10% of the Paid up value of each shares of debentures of the company
  3. Aggregate Ceiling of 10% can be raised to 24%, if a special resolution is passed by the Indian Company to give effect to the same.

Repatriation of Funds

  • Repatriation of Sale Proceeds of NRI Investment in India is allowed if the original purchase was made on repatriation basis and source of investment were from NRE/FCNR Account or by means of remittance from abroad
  • If the original purchase was made from NRO A/c then the sale proceeds are not repatriable.

A Personal Finance enthusiast, Karan is the founder of charteredclub.com and loves to discuss about Money related matters.