PIS account for NRI’s – Invest in Direct Equities in India

POSTED BY Vandana Manwani ON November 11, 2019 COMMENTS (10)

Are you an NRI who is planning to invest in direct stocks or other equity options? Indian economy is one of the fastest-growing economy and many NRIs and PIOs are planning to invest in Indian equities, but they are not sure, whether they can invest in India or not? And what is the procedure for investment?

As per rules, an NRI can also invest in direct equities, equity mutual funds or future & options (F&O) in India just like a resident but NRI’s have to open a separate account called as PIS account (portfolio investment scheme account) for investing in direct equities and we will look at that today.

PIS Account (Portfolio investment scheme)

PIS or portfolio investment scheme account is an account to be opened by NRI’s if they want to invest in stocks directly. This PIS account allows NRIs to buy and sell shares and convertible debentures of Indian companies on BSE & NSE by routing such transactions through their NRE/NRO bank account.

How to get PIS Account activated?

  • Step 1 – Open an NRE account/NRO account or you may already have it
  • Step 2 – You need to ask your bank for PIS form, fill a form ‘Application for designating bank account for PIS’ and submit it to the bank. Bank will send the form to RBI for approval.
  • Step 3 – Once approved by the RBI, the requested bank account (NRE or NRO) is designated as PIS Account.
  • Step 4 – Your Demat account and trading account will be linked with PIS account to enable the buy and sell of stocks at NSE/BSE.

Once your PIS account is linked with Demat and trading account, you can invest in stocks online.

Non-PIS Account

By default, every NRE/NRO account is a non-PIS account (PIS is not activated). Following are the investments which can happen with non-PIS account.

  • Mutual Funds and IPOs.
  • Sale of shares acquired through Right Issues/ ESOP
  • Sale of shares received in inheritance
  • Sale of shares received in bonus
  • Sale of shares bought when NRI was resident Indian.

Many banks make it mandatory to open a separate Non-PIS account along with a PIS Account. They offer 4-in-1 Account which includes:

  • NRI Saving Bank Account (Non-PIS)
  • NRI Saving Bank Account (PIS)
  • NRI Demat Account
  • NRI Trading Account

Important points

  • Transactions from a Non-PIS account are not reported to the RBI.
  • The PIS account cannot be a joint account
  • NRIs cannot do intraday trading with PIS account. NRI’s can’t sell stocks without taking delivery of the shares/convertible debentures purchased.
  • Short selling is not permitted under PIS.
  • One can have only 1 PIS linked account. If you would like to open a PIS account with another bank, you will have to close the existing PIS account first.
  • In case of POI, the POI card is also required in documentation
  • In case your overseas address is not in English, you need to get it translated by a translator in your city and get their stamp
  • In case you do not want to travel to India just for making investments, you can always give POA (Power of attorney) to someone trusted who can do the process for you.

3 account to be opened along with PIS account

Note that PIS is mainly a permission and not an account in itself. If you want to buy and sell stocks in India, you would need NRE/NRO bank account along with Demat and Trading account. Below are the details for each of those.

NRE/NRO Saving Bank Account

For any type of investment in India by NRI, whether it be mutual funds, commodities, or stocks, IPO having an NRE or NRO account is mandatory.

  • NRE Account – NRE account is a bank account where money is deposited in Indian as well as foreign currency. You can use the money deposited in it, in the country of your residence or in India. Therefore, it is called as repatriable.
  • NRO Account – NRO bank account is only partially repatriable, means you can use the money only in India. And you can only deposit Indian income in this account. It is used to deposit rent, interest, other source income earned from India.

So depending on your situation and income type, you need to open these accounts. One can have any number of NRE/NRO accounts if required.

Many NRIs are using saving bank account for transacting in India, which is illegal. So, once you become an NRI, you should convert your saving bank account into NRE/NRO account.

These are just marking on existing saving bank account. One needs to fill a required form and attach required documents like PAN, Identity proof of country of residence, Passport, etc.

Demat Account

Demat account is to hold securities (shares) in electronic format. Unlike most developed countries where equity holding is kept with the broker, in India, they are kept in a separate account called Demat account. The Demat account is a secured online account.

First time NRI investors need to open a Demat account with a registered broker. Various brokers like Zerodha, ICICI, and Axis, IIFL, etc., are available for NRI investors.

Every broker offers different services and charges different fees and brokerage for the same. It is wise to check every detail of the broker before opening a Demat account. To open an NRI Demat account, the following documents are needed to be submitted-

  • Bank Account Statement/ Passbook Bank proof should indicate NRE/NRO saving a/c bank details
  • Foreign address proof
  • Indian Passport
  • PAN card
  • Photograph of investor
  • Canceled bank account cheque
  • If NRE or NRO is not mentioned (pre-printed) on the cheque, then bank verification letter is required.

All the photocopy of the KYC document should be attested by any of the entities like Notary Public, any Court, magistrate, judge, Local banker, Indian embassy, Consulate General of the country where NRI is residing.

Trading Account

In addition to a Demat account, an NRI also needs an NRI trading account to trade in stock exchanges i.e. to place buy/sell orders. The documents required to open NRI Trading accounts same as NRI Demat account.

Most brokers offer 2-in-1 account services wherein an NRI can open both trading & Demat account at once. Some stockbrokers who are part of a banking group such as ICICI Direct, HDFC Securities and SBI Capital, etc., offer all services like NRE/NRO account, Demat and Trading accounts are opened at once.

Let us know if you have any more queries related to PIS account? We will be happy to answer them in the comments section

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10 replies on this article “PIS account for NRI’s – Invest in Direct Equities in India”

  1. MAHESH says:

    CAN I USE NON PIS ACCOUNT FOR TRADING IN BOTH MUTUAL FUND AND EQUITIES

    1. Jagoinvestor says:

      No, you can only use it for Mutual funds. not for equities

  2. Naresh says:

    Do I need to PIS enabled on my NRE or NRO to purchase mutual funds using a SIP(Simple Investment Plan)?

    I have a SIP with SBIMF where in I created a folio based on my PAN (KYC verified) and using my SBI NRE account to purchase SBI mutual funds under SIP. My SBI NRE account is not PIS enabled. I am super confused.

    1. Jagoinvestor says:

      NO , if you read the article you will know that the normal NRE/NRO account is enough for mutual funds investments. No need to take PIS permissions

  3. Jitendra Gupta says:

    Hi, I really love your post and read them regularly. One simple request other than your post.. in this article India’s map is incorrect. It is not showing a complete part of Jammu & Kashmir. I do understand this is a financial related post and the posted picture is just for notification only. Being an NRI I felt that should correct hence just letting you know. Thanks.

    1. Vandana Manwani says:

      Thanks, Jitendra,

      I really appreciate your concern. I have changed it.

      Vandana

  4. Rohan says:

    Great Article. Had a query – As mentioned in your article, an NRI can only have 1 PIS bank account. But can he/she have multiple demat/trading accounts?

    1. Vandana Manwani says:

      Hi Rohan,

      One can have multiple demat and trading accounts, as these are broker/stock exchange intermediaries specific. If you are not satisfied with one broker in case of commission or transaction process or anything, you are free to transact with other broker using demat & trading account linked with his portal.

      Thanks,
      Vandana

  5. Gopi says:

    Thanks for the article.
    I have a demat – both NRE and NRO account with Indusind. I used to have a trading account (offline) with Sharekhan. However they have stopped supporting all NRI accounts. How do I move this trading account to any other good trading account?

    1. Vandana Manwani says:

      Hi Gopi,

      Every stockbroker provides own Demat and trading account linked to his platform. So, you have to open a new Demat account with other intermediaries to enable trading as an NRI. And you also need to get approval from RBI for the PIS account, then only you can start investing in the stock market.

      Vanadana

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