Saving Mantra Blog: Step-by-Step Process for Investment in Securities for NRI in India
Investing in Indian securities offers NRIs the opportunity to diversify portfolios, earn returns, and participate in India’s growing economy. NRIs can invest in equities, mutual funds, bonds, and derivatives subject to RBI/FEMA and SEBI guidelines.
This Saving Mantra guide explains the complete step-by-step process for NRIs to invest in securities in India, including account setup, documentation, investment rules, repatriation, and compliance.
✔ Step 1: Understand the Investment Rules for NRIs
NRIs can invest in Indian securities via two types of accounts:
- NRE Account (Non-Resident External)
- Repatriable principal & interest
- Fully convertible to foreign currency
- NRO Account (Non-Resident Ordinary)
- Non-repatriable without RBI approval (up to USD 1 million)
- Suitable for income earned in India
Investment options available:
- Equity shares (listed on NSE/BSE)
- Mutual funds
- Government and corporate bonds
- Exchange Traded Funds (ETFs)
- Derivatives (if SEBI registered)
✔ Step 2: Open Necessary Accounts
NRIs must open:
- Bank Account (NRE/NRO) – For fund transfer
- Demat Account – To hold securities in electronic form
- Trading Account – Linked to Demat account for buying/selling securities
Banks and brokers often provide 3-in-1 NRI accounts integrating Bank + Demat + Trading accounts.
✔ Step 3: Complete KYC (Know Your Customer)
KYC documents required for NRIs include:
- Passport (primary ID)
- Overseas address proof
- Indian address proof (if any)
- PAN card (mandatory)
- Photographs
- NRI declaration / PIS (Portfolio Investment Scheme) registration
Note: For investing in equities, NRIs must register under Portfolio Investment Scheme (PIS) with RBI through an AD Category-I bank.
✔ Step 4: Register Under Portfolio Investment Scheme (PIS)
PIS allows NRIs to invest in Indian stock markets under RBI monitoring.
Procedure:
- Apply through AD Category-I bank
- Provide PAN, passport, NRI status proof
- Linked to NRE/NRO account
- Bank forwards application to RBI for approval
Once approved, NRI can invest in equities via trading account.
✔ Step 5: Fund Your Accounts
- Transfer funds from overseas to NRE/NRO accounts
- Maintain documentation for FEMA compliance
- NRE account funds are fully repatriable, NRO subject to repatriation limits
✔ Step 6: Start Investing in Securities
NRIs can now invest in:
- Equities – Buy/sell listed shares on NSE/BSE
- Mutual Funds – Invest in schemes allowed for NRIs
- Bonds/Debentures – Corporate or government
- ETFs & Derivatives – Eligible NRIs only
Tips:
- Monitor sector limits for FDI/FPI
- Avoid prohibited trades
- Check repatriation rules
✔ Step 7: Repatriation of Funds
- NRIs can repatriate proceeds from NRE accounts freely
- NRO account repatriation allowed up to USD 1 million per financial year with Form 15CA/15CB
- Maintain bank records for RBI verification
✔ Step 8: Taxation and Compliance
- Dividend income: Taxed at 20% (DTAA may apply)
- Capital gains tax:
- Short-term: 15% on listed shares
- Long-term: 10–20% depending on holding
- TDS applicable on dividends and gains
- File Indian income tax return if taxable income exists
- Maintain investment records for FEMA and RBI compliance
✔ Step 9: Reporting Requirements
- RBI & AD Bank: For PIS transactions
- SEBI Compliance: Broker reports transactions
- Income Tax: TDS deducted and annual IT return
Non-compliance may lead to penalties and restrictions on trading.
Conclusion
Investing in Indian securities is a lucrative opportunity for NRIs. By following the step-by-step process—account setup, PIS registration, investing via approved channels, and complying with FEMA and tax laws—NRIs can maximize returns safely while ensuring full compliance with Indian regulations.
Disclaimer
This blog is for informational purposes only. It does not constitute legal, tax, or investment advice. Regulations under RBI, SEBI, and FEMA may change. NRIs should consult professionals before investing in Indian securities.