Investment Limits for NRIs under the Portfolio Investment Scheme (PIS)
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Individual NRI cannot purchase more than 5% of the paid-up capital of the company / total paid-up value of the convertible debentures of the company on repatriation as well as on non-repatriation benefits. The overall ceiling of 10% of the paid-up capital / paid-up value is applicable for all the NRIs put together. NRIs can deal with only one designated branch of the bank at any time.
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For NRIs looking to invest in the Indian stock market, this ceiling is crucial for NRI investment in the share market. Similarly, the same limits apply when NRIs invest in mutual funds or other securities.
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The aggregate ceiling of 10% may be raised to 24% if a special resolution to that effect is passed by the General Body of the Indian company. This can affect how NRIs invest in mutual funds or alternative mutual funds as well. The tracking of the 10% limit is done by the RBI, which also monitors mutual funds and Indian investments. RBI starts the caution at 8%. The same is published on the RBI website, helping NRIs plan their mutual fund investment through NRI strategies and AIF alternative investment fund participation.
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For NRIs interested in other investment options, such as FD in India for NRI, NRI fixed deposit rates in India, or NRI interest rates in India, they need to stay updated with these regulatory limits. Additionally, PMS taxation for NRI may also come into play when making investments in India.
Also Read: What all investments require a PIS Account for NRI and why?