Portfolio Investment Scheme (PIS) is a scheme of Reserve Bank of India defined in Schedule 3 of Foreign Exchange Management Act 2000. As per the scheme the NRIs and OCBs can purchase and sell shares and convertible debentures of Indian Companies on a recognised stock exchange by routing such purchase/sale transactions through their account with a Designated Bank Branch. (With effect from 29/11/2001 RBI has restricted OCBs from making fresh purchases. They can however continue their existing holdings or sell off the same).
NRIs can invest on repatriation and non-repatriation basis under PIS route upto 5 percent of the paid-up capital/ paid-up value of debentures of listed Indian companies.
Payment for purchase of shares/debentures on repatriation basis has to be made by way of inward remittance of foreign exchange or out of funds held in NRE/FCNR (B) account maintained in India. If the shares are purchased on non-repatriation basis, NRIs can also utilise their funds in NRO account in addition to the above.
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Know the process to open NRE and NRO accounts