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Investments by Non-resident Indians (NRIs) under Portfolio Investment Scheme (PIS) Liberalisation of Policy

A. P. (DIR Series) Circular No.29

August 20, 2013


All Category-I Authorised Dealer Banks

Madam / Sir,

Investments by Non-resident Indians (NRIs)
under Portfolio Investment Scheme (PIS)
Liberalisation of Policy

Attention of Authorised Dealers Category-I (AD Category - I) banks is invited to Schedule 3 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000 (hereinafter referred to as Notification No. FEMA 20), as amended from time to time in terms of which, NRIs can invest under PIS on repatriation and/or non-repatriation basis in shares and convertible debentures of listed Indian companies on a recognized stock exchange in India through a registered stock broker. Further, NRIs may purchase and sell shares/convertible debentures under the PIS through a branch designated by an Authorised Dealer for the purpose and duly approved by the Reserve Bank of India.

2. As a measure of further liberalisation, it has been decided to

i) allot Unique Code number only to Link office of the AD Category - I bank; and

ii) dispense with the allotment of Unique Code number to each branch designated by that AD Category - I bank administering the Scheme. Accordingly, henceforth in accordance with the policy approved by the Board, AD Category - I bank shall be free to permit its branches to administer the Portfolio Investment Scheme for NRIs subject to the following:

a) the AD Category - I bank while granting permission to NRI for investment under PIS shall allow them to operate the scheme as per the terms and conditions are as Annex-A;

b) the designated link office shall continue to report on a daily basis PIS transactions undertaken on behalf of NRIs for their entire bank to the Reserve Bank under the Online Report Filing System (ORFS) in form LEC (NRI) as per present practice in vogue web site (;

c) the AD Category - I bank shall provide to the Reserve Bank the complete contact details of such link office in advance before commencing operations;

d) the AD Category - I bank shall sensitise the branches administering the Scheme to ensure that NRIs are not allowed to invest in any Indian company which is engaged or proposes to engage in the business of chit fund, Nidhi company, agricultural or plantation activities, real estate business (does not include development of townships, construction of residential / commercial premises, roads or bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships), construction of farm houses, manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes and trading in Transferable Development Rights (TDRs) and in sectors/ activities as specified in terms of Notification No. FEMA.1/2000-RB dated May 3, 2000, as amended from time to time; and

e) ensure compliance with instructions issued through A.D.(M.A. Series) Circulars, EC.CO.FID circulars annexed as Annex-B and the regulatory requirements under FEMA, 1999. It may be noted that Overseas Corporate Bodies( OCBs) have been derecognized as an eligible ‘class of investor’ under various routes/scheme available under the extant Foreign Exchange Management Regulations in terms of the Foreign Exchange Management [withdrawal of General Permission to Overseas Corporate Bodies( OCBs)] Regulations, 2003 notified vide Notification No. FEMA.101/2003-RB dated October 3, 2003.

3. AD Category - I banks may bring the contents of the circular to the notice of their customers/constituents concerned.

4. Reserve Bank has since amended the Regulations and notified vide Notification No. FEMA.261/2013-RB dated February 27, 2013 vide G.S.R. 515(E) dated July 30, 2013.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)
Chief General Manager-in-Charge