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Essential Guidelines for the Growing NRI Share Trading in India


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Investing in India is turning out to a lucrative option for countless investors from across the world. There are so many advantages to enjoy by making investments in the country. These include massive pool of scientific and technical workforce, high literacy rate, huge domestic market, mounting purchasing power of masses, large democratic system, autonomous judiciary system and disciplined capital and money markets. A continuous rise in economy and booming business of Indian stock markets and real estates has enticed global investors to trade in India. The maximum numbers of investors among them are Non-resident Indians or NRIs who also seek to cash in on the opportunity that is prevailing here. NRI share trading is the next big thing in the Indian capital markets nowadays.
NRI share trading is regulated by certain statutory guidelines. So if you’re a non-resident Indian and eager to invest in your beloved country, you must be aware of these guidelines:
You can carry on dealings with a solitary bank at any instant of time. Portfolio Investment Scheme or PIS approving can be exclusively issued by one bank.
You cannot do intra day trading, i.e. taking more than one positions all through the trading day is not permitted. NRIs can only engage in delivery-based transactions. BTST (Buy Today Sell Tomorrow) is not granted to them.
You will be permitted to make investment merely up to 5 percent of the paid-up capital of the company. The purchase of definite scrips is not allowed under this guideline. You can go through the same report posted on the Reserve Bank of India (RBI) website.
NRI share trading can be carried out only with cent percent funds at the time of purchase. You won’t be given any kind of exposure. In the same manner, you must possess cent percent stock with you at the time of selling. No short sale is permitted.
The contract notes of non-resident Indians are made known to respective bank on a daily basis and the bank in turn notify them to RBI.
You will be demanded to make bill-to-bill payments or settlements. There must be no adjustments of purchase against sale consideration. Similarly, buying and selling will be conducted individually in case of payments/receipts.
Initial Public Offerings (IPOs) or mutual funds can be enforced through non PIS i.e. by means of NRE/NRO Savings account.
FNO dealings can be diverted through NRO non PIS that means through NRO Savings account. In case of F&O (Future & Options) transactions, distinct code is assigned by the National Stock Exchange (NSE) and the same has to be attached while laying F&O order for NRI customers in conjunction with the client code.
You should bear in mind that NRI share trading is regulated by both Stock Exchange Board of India (SEBI) and RBI. Non conformity to the above mentioned guidelines is a highly offensive act and is dealt with very strictly as the same is regarded as an infringement in Foreign Exchange Management Act (FEMA).


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