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PIS vs. Non-PIS: How Should NRIs Invest in Stocks in India?
PIS vs. Non-PIS: How Should NRIs Invest in Stocks in India?
To invest in stocks in India, NRIs need either a PIS or Non-PIS account. But how are the two different? More importantly, which account is better under what scenarios? Find our in this article.
December 6, 2023

Portfolio Investment Scheme (PIS) and Non-PIS are the two most common accounts used by NRIs to invest in the Indian Stock market.

These are two types of bank accounts that enable you to buy and sell stocks, mutual funds, bonds, and other securities in India. 

But what is the difference between them, and which one is better for you?

In this article, we compare PIS and non-PIS accounts and help you choose the best option for your investment needs.

What are PIS (Portfolio Investment Scheme) Accounts?

Portfolio Investment Scheme (PIS) is a facility provided by the Reserve Bank of India (RBI) that allows NRIs and PIOs to invest in stocks and bonds of Indian companies listed on the stock exchange.

PIS accounts can be opened with both NRO and NRE accounts. Just like the difference between the bank accounts, the key difference between NRO and NRE PIS accounts is repairability. NRE PIS accounts are freely repatriable, while NRO PIS accounts have certain restrictions.

What are Non-PIS Accounts?

Non-PIS accounts enable NRIs and PIOs to invest in certain financial instruments in India without going through the PIS route. Non-PIS accounts are not subject to the reporting requirements (to RBI) like PIS.

An NRO non-PIS account allows NRIs to purchase and hold equity shares, preference shares, bonds, convertible debentures and warrants on a non-repatriation basis. 

The NRE non-PIS account allows you to invest foreign earnings in India. However, you cannot invest in stocks through this account. But, you can manage earnings from the sale of stocks obtained through Initial Public Offerings (IPOs), Employee Stock Ownership Plans (ESOPs), or received as gifts.

Difference Between NRI PIS and Non-PIS Accounts

The following table summarises the key differences between PIS and non-PIS accounts:

Aspect

PIS

Non PIS

Savings Account

NRE Savings account

NRO Savings account

Purpose

Buy and sell equity shares on a repatriation basis.

Buy and sell financial securities and mutual funds on a non-repatriation basis.

PIS Permission Letter

Required from RBI via partner bank

Not required

Repatriability

Can be repatriable

Non-repatriable

Instruments

Exclusively for shares traded on Indian stock exchanges.

Shares, equity futures & options, currency, commodities, and mutual funds

Investment Restriction

Maximum foreign or NRI shareholding in a company by RBI is applicable.

No such restrictions.

Fund Transfer

Funds from the bank must be transferred to the PIS account for investing and then will be available in the trading account. This may take up to 1 working day.

You can directly transfer funds from NRO account to a trading account using net banking.

Cost

Banks charge up to:

  • Rs 300 per contract note (per day of trading).
  • Additional Annual Maintenance Charge (AMC) of up to INR 1,500 per year.

0.10% to 1% or Rs 100 whichever is lower. Also it may vary from broker to broker.

Mutual Fund Investment

Not available

Available

Shares bought with resident status

Shares purchased as a resident Indian must be liquidated. A new demat account must be opened on a non-repatriation basis to purchase shares.

Shares purchased with Indian residential status can be transacted through a non-PIS account.

Should You Get a PIS or a Non-PIS Account?

PIS and non-PIS are two different types of accounts that you can use to invest in the Indian stock market. 

PIS has some limitations, such as higher fees, lower flexibility, and restricted transactions. On the other hand, non-PIS accounts have a repatriation limit of $1 million per financial year after considering taxes and other applicable regulations. 

Furthermore, the process for opening a demat account is offline and comes with its own challenges.

PIS account works better

If you want to:

  • Invest your foreign earnings in India
  • Invest on a repatriable basis or want to remit funds abroad
  • Invest in the Indian stock market using an NRE account

Non-PIS account works better

If you want to:

  • Invest income earned in India
  • Invest in Indian financial instruments on a non-repatriable route

But Should You Invest in Stocks at All?

Stock investing requires a lot of research and time to track the investments. Staying in different time zones can make it even more challenging. Instead of going through this cumbersome process, an easy way to invest in Indian markets is through mutual funds. 

Here’s a good read for you where we compared mutual funds vs. stocks. Find out what’s best for you. 

You can invest in mutual funds via the folio-based route (no demat account required). This is the easiest way to invest in mutual funds online, and you don't have to worry about PIS and non-PIS accounts. 

Conclusion

PIS and Non-PIS are two different types of accounts that you can use to invest in the Indian stock market. 

PIS is suitable if you want to invest your foreign earnings in India. However, it has some limitations, such as higher fees, lower flexibility, and restricted transactions. 

On the other hand, Non-PIS accounts are suitable when you want to invest your income earned in India. However, they have a repatriation limit of $1 million per financial year after considering taxes and other applicable regulations. 

The choice between PIS and non-PIS accounts for investing in the Indian stock market depends on your individual preferences, financial objectives and access to funds. 

Investing through PIS and Non-PIS requires a demat account. And, the process for demat account opening is offline and comes with its own challenges. 

Mutual funds are the easiest and most suitable alternative to investing in the Indian markets, which do not require a demat account. You can invest through the direct route (folio based investing).

iNRI is a platform that allows you to directly invest in mutual funds with the hassle of opening a demat account. 

If you are still confused about how to invest, speak to our experts, who can suggest the best way to invest and suggest the right assets based on your investment preferences. 

PIS vs Non-PIS: Frequently Asked Questions (FAQs)

Is PIS mandatory for NRI?

No. You can invest in India through a non-PIS account as well. You will need a NRE or NRO savings bank account. 

Can NRIs have 2 PIS accounts?

No. You can have only 1 PIS account each for NRE and NRO accounts. For this, the NRE and NRO accounts must be with the same designated bank. If you wish to open another PIS with a different banker, then you will have to close the current PIS account to open a new one. 

What is the minimum balance in a PIS account?

There is no minimum balance for a PIS account. 

Do NRIs need a PIS certificate to invest in Mutual Funds?

No. You don’t need a PIS certificate to invest in mutual funds. You can invest through a non-PIS NRE or NRO account i.e., if you want to hold them in your demat account. For the folio route as well, you wouldn’t need a PIS certificate. 

How many banks can NRI appoint for PIS?

You can appoint only 1 designated bank for PIS. Here’s a list of a few banks that you can appoint for PIS (not an exhaustive list):

  • ICICI Bank
  • HDFC Bank
  • SBI Bank
  • Axis Bank
  • Kotak Mahindra Bank
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