Investment in Securities
A. NRIs can invest in shares and convertible debentures through Portfolio Investment Scheme (PIS) and otherwise:

I. PIS:
PIS is a scheme of Reserve Bank of India defined in Schedule 3 of Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000. As per the scheme, NRIs can purchase and sell shares and convertible debentures of Indian companies through a registered broker on a recognised stock exchange by routing such purchase/sale transactions through their account with a designated bank branch.
 
Individual NRI cannot purchase more than 5% of the paid up capital of the company / total paid up value of the convertible debentures of the company on repatriation as well as on non-repatriation benefits. The overall ceiling of 10% of the paid up capital / paid up value is applicable for all the NRI’s put together. NRI can deal with only one designated branch of the bank at any time.

The aggregate ceiling of 10% may be raised to 24% if a special resolution to that effect is passed by the General Body of the Indian company. The tracking of 10% limit is done by the RBI. RBI starts the caution at 8%.The same is published on RBI website.

Bank has to upload on daily basis the ASCII file (which shall contain the details of the PIS transactions undertaken by NRI’s for the entire Bank) on RBI portal.

II. NRI’s can invest in shares or convertible debentures without limit on Non repatriation basis:
NRI can purchase, without any limit, on non -repatriation basis, shares or convertible debentures of an Indian company issued whether by public issue or private placement or right issue.

B. NRIs can invest in securities other than shares and convertible debentures:

NRI’s can invest in the below-mentioned securities without the portfolio investment scheme:

 

Repatriation basis

Non-Repatriation basis

Bonds issued by PSU and Infrastructure Debt Funds

Yes

 No

Non-Convertible Debentures

Yes

Yes

Government securities (other than bearer securities)

Yes

Yes

Units of domestic mutual fund/Money Market Mutual funds

Yes

Yes

Commercial Papers

No

Yes

Non-convertible / redeemable preference shares

Yes

Yes