NRI Investment Terminology

FCNR: Foreign Currency Non-Resident Account. It is maintained in foreign Currency viz., US Dollar (USD), Pounds Sterling (GBP), Euro Currency (EUR) and Japanese Yen (JPY), but only as fixed deposits.The Principal and Interest earned thereon are repatriable.

NRE Bank Account: Non-Resident External Account. Maintained in Indian Rupees, both in the form of savings bank and fixed deposit. Principal and Interest earned thereon are repatriable

NRO Bank Account: Non-Resident Ordinary Account. Maintained in Indian Rupees, both in the form of savings bank and fixed deposit. Taxable under Indian Income Tax. Principal is not repatriable whereas interest earned thereon is repatriable, after payment of applicable taxes. Best suited for NRIs who have some sort of income accruing in India viz., Rental income, dividend etc. Can be maintained jointly with a resident Indian.

Portfolio Investment Scheme (PIS):This is similar to the NRE/NRO savings a/c. The NRI can trade in the secondary stock market with Repatriation (from NRE PIS a/c) and on non-repatriation basis(from NRO PIS a/c). Demat a/c's can be opened with signatures of Power of Attorney(POA)

FAQ’s for NRI’s

What is the classification of NRI’s? How do I know if I classify as NRI?
Non- Resident Indian means a ‘person resident outside India’ who is a citizen of India or is a‘person of Indian origin’ Under the Foreign Exchange Management Act, 1999 [FEMA], a person who is NOT a ‘person resident in India’, as defined under Section 2 (v) of the Act is considered as a ‘person resident outside India’. The most important change in definition [since FERA 1973] is that the citizenship of a person no longer has a bearing in determination of residential status. E.g a citizen of India who is a residing in the US or other country under work permit would also be considered as an NRI

‘Person of Indian Origin’ (PIO) means a citizen of any country other than Bangladesh or Pakistan, if he at any time held Indian passport; or he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955; or the person is a spouse of an Indian citizen or a person referred to in sub-clause [a] or [b] Investment by PIO in Indian Securities is treated the same as the investment by non-resident Indians and requires same approvals and enjoys the same exemptions.

Can NRIs invest in shares, debentures and units of mutual funds in India?

NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.

Can I apply for IPO’s? if YES, then How?
Yes. The issuing company is required to issue shares to NRI on the basis of specific or general permission from GoI/RBI. Therefore, individual NRI need not obtain any permission.

What is a PIS account? Do I need it to start trading in the Indian Market?
Under this scheme, NRIs are permitted to acquire shares/debentures of Indian companies or units of domestic mutual funds through the stock exchange(s) in India. Investment can be made both on repatriation or non-repatriation basis. For making investment on
repatriation basis, it will be necessary to make payments by way of inward remittance or by debit to the NRE / FCNR account of the NRI / PIO. Investment on non-repatriation basis can also be made by way of inward remittance or by debit to the NRE / FCNR / NRO accounts. The sale proceeds of the repatriable investments can be credited to the NRE / NRO accounts of the NRI / PIO at the option of the investor, whereas the sale proceeds of non-repatriable investment can be credited only to NRO accounts.

In case the nature of investment cannot be verified, the status of the scrip will have to be
ascertained by referral to RBI. The sale of shares will be subject to payment of applicable taxes.

How do I apply for PIS?
The application is to be submitted to a designated branch of an authorised dealer in India in the prescribed form.

Reserve Bank has authorised a few branches of each authorised dealer to conduct the business under Portfolio Investment Scheme on behalf of NRIs. These branches are the main branches of major commercial banks. NRIs will have to route their applications through any of the designated authorised dealer branches who have authorisation from Reserve Bank.

The banks Authorised to accept PIS applications are HDFC, UTI, ICICI Bank

If I already have a NRE/NRO account, then how do I apply for a PIS account?
If you have a NRE/NRO account with any of the above named authorized dealers, then all you need to do is submit an application form for a PIS account.

If you however have a NRE/NRO account with a bank other than the above named banks, you will need to approach any of the above names banks and provide them details of your account and then apply for the PIS through them

How do I make payments and receive payments?
Whenever a client executes a Buy/Sell Trade in any of the exchanges, a bill for the same is
generated from our side (a copy of the bill is sent to the client by email). This bill is then presented to the respective bank of the client by Investmentor Securities Ltd. The bank verifies the clients account number and status and issues or accepts the cheque for the amount of the bill.

What about tax implications of my income/investments in India?
Most banks these days provide CA facilities for NRI’s who prepare the end-of-year statements for their clients based on the transactions of the clients in their PIS and Bank Accounts.

The Tax applicable for NRI’s are different than those applicable for Resident Indians. You can get a summary of these from a local CA.

Is it safe & reliable to invest with InvestMentor Securities Ltd?
InvestmentorOnline has placed proper security measures like SSL certificate, Firewalls, Proxy IP’s and a DMZ (Di Militarized Zone) to ensure complete safety of data from the client to the server to the corresponding exchanges. The broadcast rates come directly from the exchange and are real-time which ensures reliability of the rates and tickers

All this is very complicated, Where and How do I begin from?
Please follow our guidelines for opening an account to help you guide through the process by clicking here.

How do I open a demat/trading account?
Please follow our guidelines for opening an account to help you guide through the process by clicking here

How do I open a NRE/NRO Bank account?
Click here for details and forms for opening a NRE/NRO account with UTI bank or HDFC bank.

If I already have an NRE/NRO account with some bank and/or in some other city,
can I retain it and still open a demat and trading account with you?
You can keep the NRE/NRO account with any bank as long as it is located in the city where we have one of our branches. This more than anything else facilitates the process of cheque deposit and withdrawl based on your transactions. Your Trading and Demat Accounts are independent of your Bank Account. It is however necessary to mention your NRE/NRO bank account number in your Demat and Trading A/c Forms

If I already have a demat account with some other DP, can I still open a Trading
Account with you?
As per InvestMentor Securities Ltd’s rules and guidelines, all clients who open a Trading Account with ISL need to have a Demat Account with ISL. A client can continue to keep his/her Demat Account with another DP, but will have to open a new Demat Account with ISL.

In case a person who is resident in India becomes a non-resident, will he/she
be required to change the status of his/her holding from Resident to Non-
Resident?
NRI’s can continue to hold the securities which he/she had purchased as a resident Indian, even after he/she has become a non resident Indian, on a non-repatriable basis
How do I get to know my balance and statement of Accounts?
For your NRE/NRO bank account, the respective bank will provide you with your online user id and password through which you can monitor and carry out online trasactions through the bank.
For your account with ISL, we would provide you with our own user i.d and password
through which you would be able to monitor your Demat Account as well as Trading Account.

You would be able take advantage of the following features
Check your bills online and save them
Get a summary of your trades
Get a complete statement of account for all three exchanges
Get a profit/loss report of your trading account
Check your Demat holding online
And plenty more

What is a PAN card? Is it compulsory to have a PAN card if I am an NRI?
Permanent Account Number (PAN) card is issued to anybody who pays or will have to pay taxes in due time in India. As per the new rules and guidelines, even NRI’s are required to have a PAN card

How do I apply for a PAN card?
To know about how you can apply for a PAN card check out our guidelines for opening an account by clicking here