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1. Who is an NRI?
2. Who is a PIO?
A citizen of a foreign country (other than a citizen of Bangladesh or Pakistan) is a PIO if

(a) He/ she at any time held an Indian passport; OR
(b) He/ she or either of his/ her parents or any of his/ her grandparents was a citizen of India; OR
(c) Spouse (not being a citizen of Bangladesh or Pakistan) of an Indian citizen or (a) or (b) above

3.What is an ‘Overseas Corporate Body’ (OCB)?
‘Overseas Corporate Body’ means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Non-Resident Indians directly or indirectly but irrevocably.
OCBs are debarred from Portfolio Investment Scheme w.e.f November 29, 2001. OCBs have been banned as a class of investor w.e.f September 16, 2003. However, they have been permitted to continue to hold the securities acquired by them prior to these dates. Accordingly OCBs may open a demat account; however it can be only for the purpose of dematerializing the existing holdings.
4. What type of saving bank account(s) can be opened by an NRI or PIO in India?
Any NRI/PIO can open two types of savings accounts with any bank in India. They are NRE and NRO bank accounts.

5. What is a NRE account?
A NRE bank account is an external saving bank account opened for Non resident Indians. This is why it is known as Non-Resident External account. Since it is an external account, any monies lying in NRE account can be taken outside the country or in other words, the monies lying in NRE account are fully repatriable. This money can be converted into any foreign currency at the behest of the account holder and can be remitted outside the country

6. What is a NRO bank account?
A NRO bank account is an ordinary saving bank account opened for Non resident Indians. This is why it is known as Non-Resident Ordinary account. Since it is an ordinary account i.e. as good as a normal saving bank account, monies lying in NRO account cannot be taken outside the country or in other words, the monies lying in NRO account are not repatriable. This money cannot be converted into foreign currency and hence cannot be remitted outside the country.

7. Can a person have both normal saving as well as NRI status bank account?
Any individual cannot hold both the status i.e. Non-resident as well as resident at the same time. Therefore, if the individual is an NRI, he needs to close normal saving account and open NRE/NRO or both accounts. If the individual is resident Indian, then he needs to have a resident saving account and close NRE/NRO accounts.

8. What to do with the domestic money after becoming an NRI?
For the same NRO accounts are opened. The monies lying in resident saving account can be transferred to NRO account.

9. Can money be transferred from NRE account to NRO account?
No, money cannot be transferred from NRO account to NRE account. Money, even by error, if transferred from NRE account to NRO account, cannot be transferred back to NRE account.

10. Can one have joint holder to the bank account?
Yes, one can have up to two joint holders for a bank account. In case of NRE bank account, all the holders have to be NRI/PIO, however in case of NRO bank account; joint holders can be resident Indian also.

11. Can there be any nomination to the bank account?
Yes, nomination can be done for the bank accounts.

a. Nomination for the bank accounts can also be provided later after opening of the accounts.
b. Nominee can be a resident Indian also
c. No documents or signatures of the nominee are required for nomination.
d. Joint holder for the said accounts cannot become the nominee of the same account.

12. What is the meaning of remittance?
Remittance in banking terms means transferring of funds from one country to another country.

13. Does an NRI need any RBI permission to open a demat account?
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 authorised dealers.

14. If NRI/PIO desires to make investments under different schemes, can he hold all such securities in a single demat account?
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.

15. Does an NRI require RBI permission for dematerialiation/rematerialisation of securities?
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 NRE –Repatriable/NRO-Non-Repatriable can be dematerialised in the corresponding Depository Accounts.

16. What is PIS (Portfolio Investment Scheme)?
Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the ‘Non Resident Indians (NRIs)’ and ‘Person of Indian Origin (PIOs)’ can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.

17. Why is PIS required for trading in Indian Capital Markets?
For all the Indian companies or companies listed on Indian stock exchanges, there are certain limits which have to be monitored under FEMA regulations. For any company the foreign investment into that company cannot cross certain limit. This limit is different from company to company and sector to sector. Also individually any NRI or a PIO cannot invest more than 5% in any Indian company.

18. Can an NRI have two PIS account?
No, any NRI or a PIO can have only one PIS account in India. Say for example if he is having a PIS account with X bank and he wants to shift to HDFC Bank, then he has to close the PIS account there and open a PIS account with HDFC Bank.

19. How limit is monitored as per FEMA regulations?
On a daily basis, fresh purchases done by any NRI or a PIO need to be reported to RBI by the NRI. Since RBI could not get in touch with all the NRIs/PIOs or the demand for such facility was increasing, it has appointed some banks as designated banks to conduct this activity on its behalf. These designated banks in turn report the transactions to RBI.

20. How will bank come to know of the transaction done by an NRI?
The NRI or the PIO has to report all the transaction done on Indian stock exchanges to the bank with which he is maintaining the PIS account. This reporting has to be done within one working day after the execution of the transaction. Client has to submit the contract notes to the PIS department within one working day failing which the transaction can be held invalid. All this reporting under PIS happens automatically and no manual intervention of the client is required.

21. What is Non-PIS?
Non-PIS is an account for which the transactions are not reported to RBI. This account takes care of selling of all those shares, which are not allowed under PIS. Shares acquired under IPO or received as gift or bought as resident Indian can be sold under Non-PIS account.

22. Why is Non-PIS required?
Non PIS account takes care of certain transactions which are not covered under PIS:
  1. Under IPO, it is the responsibility of the company to inform RBI of the shares it is allotting to NRIs; therefore these shares are not covered under PIS.
  2. Shares bought as resident Indian, do not confer the ownership right to any NRI as a foreign body, therefore these shares are also not covered under PIS.
  3. While declaring bonus, it is like a fresh issue of shares at zero cost, therefore the responsibility is of the company to inform RBI about the shares it is providing to NRIs. Also since bonus is provided to all, overall percentage holding remains the same.
  4. While investing in MF, the voting right or the ownership of the shares remains with the AMC/trust and not the individual investing in the MF. Therefore, here also reporting is not required and these transactions are covered under Non-PIS.

In simple words, for transactions to be covered under Non–PIS, the acquisition should not be done under PIS.

23. Can securities purchased under repatriable and non-repatriable category be held in a single demat account?
No. An NRI must open separate demat accounts for holding ‘repatriable’ and 'non-repatriable’ ‘PIS’ or ‘Non-PIS’ securities.

24. In case a person who is resident in India becomes a non-resident, will he/she be required to change the status of his/her holding from Resident to Non-Resident?
As per section 6(5) of FEMA, NRI can continue to hold the securities, which he/she had purchased as a resident Indian, even after he/she has become a non-resident Indian, on a non-repatriable basis.

25. In case a non-resident Indian becomes a resident in India, will he/she be required to change the status of his/her holding from Non-Resident to Resident?
Yes. It is the responsibility of the NRI to inform the change of status to the designated authorised 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.

26. Can NRIs invest in shares, debentures and units of mutual funds in India?
NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.

27. Can an NRI purchase securities by subscribing to public issue? What are the permissions/approvals required?
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.

28. Does an NRI require any permission to receive bonus/rights shares?
No, it is not required.

29. Can I open more than one Demat?
Yes, you can open more than one account. There is no restriction on the number of accounts you can open with same depository participant (DP).

30. What happens if any NRI/PIO purchases shares, which he is not allowed to?
Say for example, if any NRI purchases shares of SBI, beyond the limit, which he can purchase, such fresh purchase is invalid and he would be asked to dispose of these shares immediately. Loss if any would be borne by the NRI only.

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