ICICI Bank :: NRI :: FAQs :: Online Share Trading

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Online Share Trading- Frequently Asked Questions

1. What is Portfolio Investment Scheme?
2. Can the investment made under the PINS be repatriated?
3. Can an investor under PINS have investment in repatriation as well as non-repatriation basis?
4. Do NRIs/OCBs already having an account have to open another NRE/NRO account. Can the account be joint A/Cs?
5. How many Designated Banks can an NRI/OCB appoint?
6. If an NRI/OCB has existing portfolio purchased under IPO in Primary market both on repatriation as well as non-repatriation basis, does he still have to route the sales of such holding through the Designated Bank?
7. Is there any limit for purchase/sale of shares/convertible debentures by NRI/OCB in secondary market?
8. How does NRI/OCB know whether a particular company is open for investments by NRI/OCB?
9. Is there any tax obligation?
10. Is it compulsory to place the orders for purchase/sale of shares/convertible debentures through the Designated bank?
11. Can NRI/OCB sell the shares/convertible debentures purchased within the same settlement cycle?
12. How does NRI/OCB correct its position in case of purchase of share/convertible debentures in excess of the prescribed limit if any?
13. Is there any formal approval required for PINS facility from the Designated Bank?

What is Portfolio Investment Scheme?
Portfolio Investment Scheme (PINS) 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).

Can the investment made under the PINS be repatriated?
The repatriation of the sale proceeds are allowed if the original purchase was made on repatriation basis and the sources of investment were from NRE/FCNR account or by means of remittance from abroad. If the orginal purchase was made from NRO a/c then the sale proceeds are not repatriable.

Can an investor under PINS have investment in repatriation as well as non-repatriation basis?
Yes. Investment can be made on repatriation as well as non-repatriation basis. However, the investor will have to open NRE account as well as NRO account with the Designated Bank. The sale proceeds of Non repatriable investment can be collected in NRO A/c only.

Do NRIs/OCBs already having an account have to open another NRE/NRO account. Can the account be joint A/Cs?
As per recent RBI guidelines, NRI/OCB should have a separate bank account exclusively for PINS purposes. Transactions relating to their personal banking as well as on account of transactions relating to shares acquired other then under PINS including IPOs should be routed in a separate bank account not linked to PINS. Account/s can be joint.

How many Designated Banks can an NRI/OCB appoint?
NRI/OCB can appoint only one Designated bank for the purpose of routing the transactions under PINS.

If an NRI/OCB has existing portfolio purchased under IPO in Primary market both on repatriation as well as non-repatriation basis, does he still have to route the sales of such holding through the Designated Bank?
The shares/convertible debentures acquired under IPO need not be routed through Designated Bank as this does not come under PINS. Such transactions, if routed through designated bank, should be done in a separate bank account not linked to PINS.

Is there any limit for purchase/sale of shares/convertible debentures by NRI/OCB in secondary market?
Yes. NRI/OCB can purchase upto a maximum of five percent of the paid up capital of a company and maximum of five percent of paid up value of each series of debentures. For the purpose of this ceiling investment in repatriable and non-repatriable will be clubbed. In addition to above NRIs/OCBs collectively can hold upto a maximum of 10% of such holding or any higher percentage so permitted in respect of any particular company. Shares/debentures acquired through primary market are excluded for the purpose of above limits.

How does NRI/OCB know whether a particular company is open for investments by NRI/OCB?
RBI notifies a list of companies where the ceiling limit has reached and where no fresh purchases can be made. This list is called watch list.

RBI also notifies a list called caution list notifying the names of companies whose NRI/OCB holdings has reached 2% below the ceiling limit. Any further purchases are allowed only by obtaining prior approval from RBI. Such approvals are issued by the RBI on first come first serve basis.

Is there any tax obligation?
The sales proceeds are subject to Capital Gains tax. The rate of tax depends upon the period of holding. Currently the rate for short-term capital gains tax is 11.33% and for long-term capital gains is 0% inclusive of surcharge in both the cases. Such tax will be deducted at source by the Designated Bank.

Is it compulsory to place the orders for purchase/sale of shares/convertible debentures through the Designated bank?
The orders need not be placed through the Designated Bank. However, the reporting of the transaction shall be done to the Designated Bank on the same day of transaction along with original contract note. However, the payment and receipt of funds in settlement of such trade has to be routed through the Designated Bank account.

Can NRI/OCB sell the shares/convertible debentures purchased within the same settlement cycle?
No. NRI/OCB cannot sell without taking delivery of the shares/convertible debentures purchased. Short selling is not permitted under PINS.

How does NRI/OCB correct its position in case of purchase of share/convertible debentures in excess of the prescribed limit if any?
NRI/OCB will have to off load such portion of the holding, which is in excess of the prescribed limit.

Is there any formal approval required for PINS facility from the Designated Bank?
Yes.The Designated Bank will issue approval on receipt of prescribed form.

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