Purchase/sale of shares and/or convertible debentures by NRIs/OCBs on
a Stock Exchange in India under Portfolio Investment Scheme
2. Under the Portfolio Investment Scheme, NRIs/OCBs are permitted to purchase/sell shares and/or convertible debentures of an Indian company through a registered broker on a recognised Stock Exchange subject to conditions indicated in the above-mentioned schedule. One of the conditions under which shares/convertible debentures can be purchased/sold under Portfolio Investment Scheme is that the payment for such purchase is made by inward remittance in foreign exchange through normal banking channels or out of funds held in NRE/FCNR account maintained in India if the shares are purchased on repatriation basis. The consideration can be paid by inward remittance or out of fund held in NRE/FCNR/NRO/NRNR/NRSR account of the NRI/OCB concerned if the shares are purchased on non-repatriation basis. It has been observed that NRIs/OCBs use a single NRE/NRO/NRSR/NRNR account to route all transactions whether under PIS or not. Consequently, sale of shares acquired under modes other than PIS also get included in these accounts
3. It has been decided that henceforth designated branches may open a separate NRE/NRO/NRNR/NRSR account for the exclusive purpose of routing the transactions under Portfolio Investment Scheme. They may ensure that amounts due to sale of shares which have been acquired by modes other than Portfolio Investment Scheme (such as underlying shares acquired on conversion of ADRs/GDRs, shares acquired under direct investment schemes and shares purchased outside India from other NRIs/OCBs) do not get credited/debited in the account opened exclusively for routing the PIS transactions. By way
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of further clarification, ADs are advised that the permissible credits and debits in the account for routing PIS transactions will be as under :
Permissible Credits
(i) Inward remittance through normal banking channels;
(ii) transfer from other NRE accounts or FCNR account;
(iii) Sale proceeds of the shares which were acquired under Portfolio Investment Scheme and sold on Stock Exchange through a registered broker.
Permissible Debits
(i) Outward remittance;
(ii) Amounts paid on account of purchase of shares on Stock Exchange through a registered broker under Portfolio Investment Scheme;
(iii) Any charges on account of sale/purchase of shares under the Portfolio Investment Scheme.
4. Link Offices may bring the contents of this circular to the notice of all their designated branches authorised to undertake transactions under Portfolio Investment Scheme.
5. Please acknowledge receipt and confirm that necessary action has been taken.
Fema consultancy/advisory for non residents Indians contact CS Gaurav Kumar Sharma- 9990694230
a Stock Exchange in India under Portfolio Investment Scheme
2. Under the Portfolio Investment Scheme, NRIs/OCBs are permitted to purchase/sell shares and/or convertible debentures of an Indian company through a registered broker on a recognised Stock Exchange subject to conditions indicated in the above-mentioned schedule. One of the conditions under which shares/convertible debentures can be purchased/sold under Portfolio Investment Scheme is that the payment for such purchase is made by inward remittance in foreign exchange through normal banking channels or out of funds held in NRE/FCNR account maintained in India if the shares are purchased on repatriation basis. The consideration can be paid by inward remittance or out of fund held in NRE/FCNR/NRO/NRNR/NRSR account of the NRI/OCB concerned if the shares are purchased on non-repatriation basis. It has been observed that NRIs/OCBs use a single NRE/NRO/NRSR/NRNR account to route all transactions whether under PIS or not. Consequently, sale of shares acquired under modes other than PIS also get included in these accounts
3. It has been decided that henceforth designated branches may open a separate NRE/NRO/NRNR/NRSR account for the exclusive purpose of routing the transactions under Portfolio Investment Scheme. They may ensure that amounts due to sale of shares which have been acquired by modes other than Portfolio Investment Scheme (such as underlying shares acquired on conversion of ADRs/GDRs, shares acquired under direct investment schemes and shares purchased outside India from other NRIs/OCBs) do not get credited/debited in the account opened exclusively for routing the PIS transactions. By way
39
of further clarification, ADs are advised that the permissible credits and debits in the account for routing PIS transactions will be as under :
Permissible Credits
(i) Inward remittance through normal banking channels;
(ii) transfer from other NRE accounts or FCNR account;
(iii) Sale proceeds of the shares which were acquired under Portfolio Investment Scheme and sold on Stock Exchange through a registered broker.
Permissible Debits
(i) Outward remittance;
(ii) Amounts paid on account of purchase of shares on Stock Exchange through a registered broker under Portfolio Investment Scheme;
(iii) Any charges on account of sale/purchase of shares under the Portfolio Investment Scheme.
4. Link Offices may bring the contents of this circular to the notice of all their designated branches authorised to undertake transactions under Portfolio Investment Scheme.
5. Please acknowledge receipt and confirm that necessary action has been taken.
Fema consultancy/advisory for non residents Indians contact CS Gaurav Kumar Sharma- 9990694230
