Portfolio Investment Scheme

What is the Portfolio Investment Scheme ?

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.

What is the procedure for making application ?

The application is to be submitted to Reserve Bank through a designated branch of a bank in India in one of the prescribed forms, i.e. NRC / NRI / RPC / RPI.

What is a designated branch ?

Reserve Bank has authorised a few branches of each bank to conduct the business under Portfolio Investment Scheme 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 Reserve Bank.

Whether NRI can apply through more than one designated branch ?

No. Each NRI has to select one branch for this purpose for investment on repatriation/non-repatriation basis.

Is it necessary to maintain a bank account with the designated branch through whom the application is made ?

It is advisable to maintain bank account with the designated branch for administrative convenience.

What is the validity period of Reserve Bank approval for the purchase of shares/debentures of Indian companies or units of domestic Mutual Funds ?

Reserve Bank approval is valid for a period of five years from the date of issue. This can be renewed further by making a request by means of a simple letter.

Is there any ceiling on the investment under the Portfolio Investment Scheme ?

There is an overall ceiling of 5% of paid-up share capital of the company/paid-up value of each series of convertible debentures for purchase by NRIs / OCBs. The overall ceiling can be raised to 24% if the company concerned passes a resolution to that effect in its general body meeting. Individually, NRIs / OBCs can make investment upto 1% of the paid-up share capital/each series of convertible debentures. However, there is no ceiling on investment in domestic Mutual Funds.

Is there any lock-in period for investment made in shares/debentures of Indian companies under the scheme ?

No. The lock-in period of one year for investment made on repatriation basis prescribed earlier has since been withdrawn.