Under the scheme, NRIs/PIOs/OCBs are permitted to invest in shares/debentures (convertible/non-convertible) of Indian companies through stock exchanges in India.
In the Budget speech, the Union Finance Minister had announced an increase in portfolio investment ceiling by NRIs. In pursuance of the announcement , the following modifications have been made in the investment ceiling for NRIs/PIOs/OCBs for purchase
of shares in companies through stock exchanges under the portfolio investment scheme: -
- Investment limit by a single NRI/PIO/OCB for purchase of shares/debentures in a company through Stock Exchanges under the portfolio investment scheme has been raised to 5%.
- Aggregate limit for all NRIs/PIOs/OCBs has been raised to 10%.(This aggregate limit was earlier a part of the aggregate ceiling of 24% for all FIIs/NRIs/PIOs/OCBs (which could be raised upto 30% by a Board/General Board resolution).
- According to the liberalisation announced, the aggregate limit for investment by NRIs/PIOs/OCBs can be enhanced to 24% subject to General Body Resolution of the company to that effect. The above ceiling is separate from the ceiling of 24%/30% applicable to Foreign Institutional Investors(FIIs).
- Investment by NRIs/PIOs in unlisted companies is now permitted. Norms and procedures described above will be applicable in these cases also.
The purchase has to be made through stock exchange/designated branch of authorised dealer. Only one such branch can be designated for this purpose. For investment on non-repatriation basis, NRIs/PIOs have to apply in form NRI and OCBs in
form NRC. NRI and OCB in form NRC. For investment on repatriation basis. The forms will be RPI and RPC respectively.
The application has to be made through designated branch of authorised dealers through the Central office of the Reserve Bank of India.
- HOLDING IN JOINT NAMES
Shares/debentures purchased out of funds remitted from abroad in convertible currency or from the investor's NRE/FCNR account can be held jointly, the first holder being the NRI/PIO and the second holder a close relative of NRI/PIO.
However, if the resident inherits the shares/debentures, there will be no repatriation benefit.
- REMITTANCE OF DIVIDEND/ INTEREST/ OTHER INCOME AND SALE/TRANSFER
The same is permitted. The Indian company has to apply through the authorised dealer for this purpose.
- REMITTANCE OF INCOME ON INVESTMENT ON NON-REPATRIATION BASIS
From the Financial year 1996-97, the entire income accruing on such investments is freely repatriable after payment of tax. The NRIs/PIOs/OCBs has to designate a branch of
an authorised dealer through whom such remittance is to be made and apply to the Regional Branch of RBI under whose jurisdiction the designated branch is situated in form RCI. The Reserve Bank of India will issue necessary approval/exchange permit to the designated branch.
- Other facilities available include:
- Sale/Transfer of Shares/Bonds/Debentures by NRIs to Residents ;
- Transfer of Rupee Securities by Non-Residents as Gifts;
- Transfer of Rupee Securities to Non-Residents as Gifts;
- Loans Abroad against Securities provided in India;
- Loans in India to Non-Residents against Shares/ Securities/Properties held by them in India;
- Loans in India to NRIs against security of NRI Bonds issued by the State Bank of India;
- Loans in India against Guarantees by Non-Residents;
- Loans to Residents against Shares/Securities/Properties in India by Non-Residents;
- Loans from Non-Resident Relatives.
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