Q. What is the Portfolio Investment Scheme?
Ans. 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.
Q. What is the procedure for making applications?
Ans. 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.
Q. What is a designated branch?
Ans. 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.
Q. Whether NRI can apply through more than one designated branch?
Ans. No. Each NRI has to select one branch for this purpose for investment on repatriation/ non-repatriation basis.
Q. Is it necessary to maintain a bank account with the designated branch through whom the application is made?
Ans. It is advisable to maintain a bank account with the designated branch for administrative convenience.
Q. Is it necessary to maintain a bank account with the designated branch through whom the application is made?
Ans. It is advisable to maintain a bank account with the designated branch for administrative convenience.
Q. What is the validity period of Reserve Bank approval for the purchase of shares/debentures of Indian companies or units of domestic Mutual Funds?
Ans. Reserve Bank approval is valid for a period of five years from the date of issue. Making a request by means of a simple letter can renew this further.
Q. Is there any ceiling on the investment under the Portfolio Investment Scheme?
Ans. There is an overall ceiling of 5% of paid- up equity 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 30% if the company concerned passes a special resolution to that effect in its general body meeting and a board resolution.
Individually, NRIs/OCBs can make investment up to 1% of the paid-up equity share capital/each series of convertible debentures. However, there is no ceiling on investment in domestic Mutual Funds.
Company Deposits
Q. Can NRIs keep deposits with companies in India with repatriation benefits?
Ans. Yes. NRIs are permitted to keep deposits with public limited companies in India for a minimum period of three years subject to certain ceilings/conditions. Application for the purpose is required to be made by the company receiving the deposits through an authorised dealer.
Q. Do NRIs need permission of reserve Bank for placing funds in fixed deposits with firms/companies on non- repatriation basis?
Ans. Yes. Permission for placement of funds in fixed deposits with firms/companies in India is granted by Reserve Bank on application by the depositor or the deposit accepting firm/company, on non-repatriation basis, subject to certain ceilings/conditions.
Q. Are NRIs permitted to invest in Commercial Paper (CP) issued by Indian companies?
Ans. Yes. General permission has been granted by Reserve Bank to Indian companies to issue CP to NRI individuals subject to the conditions that the amount invested will not be repatriated outside India and the CP will not be transferable.