Purchase/Sale of Capital Instruments by NRI

Key Terms

Key terms related to for purchase/sale of capital instruments by NRI/OCI, of a listed Indian company on a recognised stock exchange in India on repatriation basis are as follows:

‘Capital Instruments’ are equity shares, debentures, preference shares and share warrants issued by an Indian company.

‘Listed Indian Company’ is an Indian company which has any of its capital instruments listed on a recognized stock exchange in India and the expression ‘Unlisted Indian Company’ shall be construed accordingly

‘Non-Resident Indian (NRI)’ is an individual resident outside India who is citizen of India.

‘Overseas Citizen of India (OCI)’ is an individual resident outside India who is registered as an Overseas Citizen of India Cardholder under Section 7(A) of the Citizenship Act, 1955.

Purchase/Sale of Capital Instruments by NRI (Non-Resident Indian) or OCI (Overseas Citizen of India), of a listed Indian company on a recognised stock exchange in India on repatriation basis

A Non-resident Indian (NRI) or an Overseas Citizen of India (OCI) is allowed to purchase or sell capital instruments of a listed Indian company on repatriation basis, on a recognised stock exchange in India, subject to the following conditions:

  • The purchase and sale is done through a designated authorised dealer branch;
  • The total holding by any individual NRI or OCI should not exceed five percent of the total paid-up equity capital on a fully diluted basis or should not exceed five percent of the paid-up value of each series of debentures or preference shares or warrants issued by an Indian company and the total holdings of all NRIs and OCIs put together should not exceed ten percent of the total paid-up equity capital on a fully diluted basis or should not exceed ten percent of the paid-up value of each series of debentures or preference shares or warrants;
  • the aggregate ceiling of ten per cent can be raised to twenty-four per cent if a special resolution to that effect is passed by the General Body of the Indian company;

Mode of Payment for purchase/sale of capital instruments by NRI/OCI

Receipt of Consideration as Inward Remittance

The amount of consideration for purchase of capital instruments should be received as an inward remittance from abroad through banking channels or out of funds held in a Non-Resident External (NRE) account maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

NRE Account designated as NRE (PIS) Account

The NRE account will be designated as an NRE (PIS) Account and the designated account should be used exclusively for putting through transactions permitted for purchase/sale of capital instruments by NRI/OCI, of a listed Indian company on a recognised stock exchange in India on repatriation basis.

Permitted Credit for NRE (PIS) Account

The specific credits permitted for the NRE (PIS) account are as follows:

  • Inward remittances from abroad in foreign exchange through banking channels;
  • Transfer from the NRI’s/ OCI’s other NRE accounts or FCNR (B) accounts maintained in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016;
  • Sale proceeds (net of taxes) of capital instruments acquired on repatriation basis in accordance with instructions contained herein with and sold on stock exchange; and
  • Dividend or income earned on investment made on repatriation basis in accordance with instructions contained in this annex.

Permitted Debit for NRE (PIS) account

The specific debits permitted for the NRE (PIS) account are as follows:

  • Outward remittances of dividend or income earned on investment made on repatriation basis in accordance with instructions contained in this annex;
  • Amounts paid on account of purchase of capital instruments on repatriation basis on stock exchanges in accordance with instructions contained in this annex;
  • Any charges on account of sale/ purchase of capital instruments in accordance with instructions contained in this annex; and
  • Remittances outside India or transfer to NRE/ FCNR (B) accounts of the NRI/ OCI or any other person eligible to maintain such accounts in accordance with the Foreign Exchange Management (Deposit) Regulations, 2016.

Remittance of Sale Proceeds

The sale proceeds (net of taxes) of the capital instruments can be remitted outside India or may be credited to NRE (PIS) Account of the person concerned.

Re-Designation of NRO (PIS) Account as NRO Account

Any account designated as NRO (PIS) shall be re-designated as NRO account.


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