is a Non-Resident Indian ?
citizens who stay abroad for employment or carrying on business
or vocation indicating an indefinite period of stay outside
India & officials deputed by Central/State Governments,
public sector undertakings on temporary assignments.
can open Bank Accounts ?
Non Resident Indians (NRIs) including persons of Indian origin
and overseas corporate bodies (OCBs) are permitted to open
Bank accounts without prior approval of Reserve Bank of India
(RBI). However, RBI permission is necessary to open accounts
for Pakistanis & Bangladesh nationals, even if they may
be covered under persons of Indian origin.
are Overseas Corporate Bodies (OCBs) ?
OCBs include companies, partnership firms, societies &
other corporate bodies in which at least 60 % of the ownership
is with NRIs of Indian nationality/origin.
is a Person of Indian Origin ?
A person holding Indian Passport at any time or either himself
or either of his parents or grand parents was an Indian &
a permanent resident of undivided India at any time is considered
to be a person of Indian origin. A wife of a citizen of India
or of a person of Indian origin is deemed to be of Indian
origin even though she may be of Non-Indian parentage. A husband,
not being an Indian national of Indian origin, who is married
to a lady of Indian origin or individual, is also eligible
to open NRI accounts.
types of Bank Accounts can NRIs open ?
Indian nationals and persons of Indian origin residing abroad
can open the following types of accounts with authorised Banks
out of the funds remitted from abroad or out of Foreign Exchange
brought in from abroad or out of the funds legitimately due
to them in India :
· Non-Resident (External) Rupee Account [NRE]
· Foreign Currency (Non-Resident) Accounts [FCNR]
· Non-Resident Non-Repatriable Rupee Deposit Accounts [NRNR]
· Resident Foreign Currency Account [RFC] for returning Indians
· Ordinary Non-Resident Rupee Accounts [NRO]
· Special Schemes viz. NRI Bonds, India Development Bonds
is an NRE Account ?
NRE Accounts are maintained in convertible rupees. The entire
credit balance held in the account inclusive of interest earned
can be repatriated & converted to any other foreign currency.
The NRE accounts can be maintained either as a Savings Bank
A/c or Current A/c or Term Deposit A/c or Recurring Deposit
A/c., in the name of the NRI or in joint names, provided all
the persons are NRIs or in the names of minor who is represented
by natural guardians. However, NRE accounts cannot be opened
by NRIs jointly with residents.
Who can operate an NRE Account ?
An NRE account can be operated by the following persons :
· by the account holder, in the case of single account;
· either or survivor (both can operate individually);
· former or survivor (only former can operate during his life
time, the survivor only after the death of former);
· latter or survivor (only latter can operate the account
during the life time, the survivor only after death of latter).
· jointly by two or more persons;
· by the mandate-holder through a letter of mandate signed
by all the account holders who can be a resident also;
· by a power of attorney holder through a power of attorney
[P.A.] who can be resident also. A resident PA holder or mandate
holder has powers to operate the account for the purposes
of making local payments only & is not allowed to repatriate
funds under any circumstances.
is investment through Primary markets and investment through
Investment made in Initial Public Offerings of shares/debentures
of new or existing companies is called primary markets investments.
Here, no individual permission of RBI is required, since the
Companies offering shares/debentures normally take the permission.
Applications can be made out of funds drawn from NRE/NRO a/c
on repatriation/non- repatriation basis as may be specified
in the terms of the NRI issue.
Buying and Selling of shares/debentures of Indian Companies
through recognized stock exchanges is called investments through
do I buy/sell stocks through the secondary market ?
You can buy/sell shares/debentures through a broker after
obtaining necessary RBI permission. To obtain RBI permission,
a Bank account in India needs to be opened with a designated
bank. Through this bank Form RPI is forwarded to the RBI for
seeking RBI permission for buying/selling shares/debentures
from the SECONDARY MARKET on repatriable basis. This form
is to be filled by the client in duplicate. RBI permission
is a blanket permission granted by RBI which is valid for
5 years. Investments on non-repatriation basis can also be
made from NRO accounts and also from funds remitted directly.
For this purpose application should be made to RBI on Form
What is a designated bank/branch?
Reserve Bank of India (RBI) has authorised a few Banks and
their select branches to conduct the business of Portfolio
Management on behalf of NRIs. These branches are the main
branches of major commercial Banks located close to the stock
exchange/s. NRIs will have to route their applications through
any of the designated bank branches who have authorisation
from RBI. The designated branches of Banks are also RBI licensed
foreign exchange dealers.
I purchase shares how do I make the payment?
A Payment can be made by cheque in favor of the broker drawn
in India through a NRE/NRO a/c. OR
You can advice your bankers abroad to issue a rupee cheque
in Indian Currency in India in favor of the broker. OR
You can send a rupee draft. OR
You can give a Power of Attorney to person resident in India
to operate your NRE/NRO account in India.
do I sell stocks I have already bought through the Primary
Form TS-4 is to filled by the NRI in duplicate for seeking
RBI permission for selling shares obtained by the NRI through
DIRECT INVESTMENT (NEW/PRIMARY NRI ISSUES).
happens when I need to sell the stock bought through the secondary
After the RBI permission is obtained by filling form RPI,
the sale order is put through any recognised member of the
Stock Exchange. The share certificates with the relevant transfer
deeds along with the RBI permission are handed over to the
broker to effect delivery.
do I receive the sale proceeds and how?
proceeds will be received by you within 7 to 15 days by cheque
in your favour which can be deposited in your NRE/NRO account
maintained in India.
are the formalities involved in repatriation of the sale proceeds?
The designated Bank through whom the RBI permission is obtained
does the repatriation of sale proceeds. The Bank immediately
repatriates the sale proceeds if they are equal to the cost
of or less than the cost of investment.
If the sale proceeds are more than the cost of investments,
there is a profit. This profit can be repatriated as follows
· If the profit is a long term gain, a flat tax of 20% is
deducted from the profit and the balance is repatriated.
· If the profit is a short term gain, it is added to the other
income of the investor in India and the funds can be repatriated
after settling the tax liability in India by obtaining tax
Are there any limits to non-resident investments in the Indian
For portfolio Investment by NRIs the earlier ceiling limiting
total NRI/OCB equity holdings in an Indian company up to 5%,
is now raised to 24%, whereas a single NRI/OCB can hold up
to 1% of the equity of an Indian Company.
What are the taxes applicable on Non-resident Indian profits?
a) Short Term Capital Gains : arises when a non resident Indian
investor sells his investment within one year of his acquiring
the same. STCG will be added to the regular income & taxed
as per the existing Income Tax laws applicable to residents.
b) Long Term Capital Gain : arises when a non resident Indian
investor sells an investment which he has held for more than
one year. In case of LTCG, a flat tax of 20% is applicable
for individuals and corporates.
Are there any tax concessions for NRIs?
Yes, there are tax concessions for NRIs. In case the sale
proceeds are reinvested within a period of 6 months, no capital
gains would be charged provided that such investments are
held for a period of 3 years.
How do I register the shares in my name? How much time does
it take the Company for registration?
When you buy shares from the market, you receive a share certificate
along with a duly signed transfer deed. Though you are the
owner of the shares, in the Companys books the shares
will be in the name of original owner. In order to avail of
corporate actions like dividend/bonus/rights which is declared
by the Company, you have to register the shares in your name
by sending the share certificate and transfer deed duly signed
to the Company or its transfer agents as the case may be.
Usually it takes 2 to 3 months to get the shares registered.
if I need to sell the shares which have gone for registration?
Shares sent for registration can be sold only after you receive
the shares duly registered.
necessary to register the shares before selling?
It is not necessary to register the shares before selling.
However if the shares are left blank and if, in the mean while
the Company announces a book closure/record date the shares
become untenable after the book closure/record date.
have a Bank account in India. Can I route my transactions
through this bank?
You can have as many NRI/NRO accounts in India but you should
have only ONE designated bank for sale/purchase of shares
under the Direct/Portfolio Investment Schemes.
RBI guidelines permit non-resident investors to designate
only one bank authorised by RBI to undertake purchase/sale
of shares/debentures through the stock Exchange on his behalf.
The client has to give a declaration that he has not obtained
RBI permission for sale/purchase of shares under the Direct/Portfolio
Investment Schemes through any other Bank.
Are there no central depositories in India?
There is one central depository in India namely NATIONAL SECURITIES
DEPOSITORY LIMITED (NSDL). Depositories Act was passed by
both the Houses of Parliament in 1996. Some companies have
already started moving towards dematerialisation of their
every effort h as
been made to ensure that the information contained is accurate,
it is given without any responsibility on our part. We will endeavour
to keep updating information in line with changes in regulations
from time to time.