Q. Who is a Non-Resident Indian [NRI]?
A. Non- Resident Indian [NRI] means a ‘person resident outside India’ who is a citizen of India or is a ‘person of Indian origin’.
Q. Who is a ‘person of Indian origin’ (PIO)?
A. ‘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.
Q. Where can an NRI/PIO open a demat account?
A. NRI/PIO can open a demat account with any Depository Participant [DP] of CDSL. The NRI/PIO needs to mention the type [‘NRI’ as compared to ‘Resident’] and the sub-type [‘Repatriable’ or ‘Non-Repatriable’] in the account opening form collected from the DP.
Q. Does an NRI need any RBI permission to open a demat account?
A. No permission is required from RBI to open a demat account. However, credits and debits from demat account may require general or specific permissions as the case may be, from designated authorized dealers.
Q. If NRI/PIO desires to make investments under different schemes, can he hold all such securities in a single demat account?
A. No. Securities received against investments under ‘Foreign Direct Investment scheme (FDI)’, ‘Portfolio Investment scheme (PIS)’ and ‘Scheme for Investment’ on non – repatriation basis have to be credited into separate demat accounts. Investment under PIS could be on repatriation or non – repatriation basis. Investment under FDI scheme is on repatriation basis.
Q. Does an NRI require RBI permission for dematerialization / rematerialization of securities?
A. No special permission is required. Holding securities in demat only constitutes change in form and does not need any special permission. However, only those physical securities which already have the status as NR – Repatriable / NR – Non-Repatriable can be dematerialized in the corresponding demat accounts.
Q. Can securities purchased under repatriable and non-repatriable category be held in a single demat account?
A. No. An NRI must open separate demat accounts for holding ‘repatriable’ and ‘non-repatriable’ securities.
Q. In case a non-resident Indian becomes a resident in India, will he be required to change the status of his holding from Non-Resident to Resident?
A. Yes. It is the responsibility of the NRI to inform the change of status to the designated authorized dealer branch, through which the investor had made the investments in Portfolio Investment Scheme and the DP with whom he/she has opened the demat account. Subsequently, a new demat account in the resident status will have to be opened, securities should be transferred from the NRI demat account to resident account and then close the NRI demat account.
Q. Can an NRI be appointed as nominee?
A. Both resident Indians as well as NRIs can nominate an NRI. Similarly, an NRI can nominate a resident Indian or another NRI. This would also depend on FEMA regulations.
Q. Does an NRI require any permission to receive bonus/rights shares?
A. No.
Q. Can an NRI purchase securities by subscribing to public issue? What are the permissions/approvals required?
A. 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.
