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PINS Account

• Q What is Portfolio Investment Scheme (PIS)
  A

  Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) (defined in Schedule 3 of Foreign Exchange Management Act 2000) through which NRIs and PIOs can purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.
  
  Reserve Bank has authorized a few branches of few banks to conduct the business under Portfolio Investment Scheme on behalf of NRIs. These branches are the main branches of major commercial banks. NRIs will have to route their applications through any of the designated bank branches that have authorization from Reserve Bank.

• Q What is PINS Account ?
  A

  Any NRI or a PIO wanting to trade/make fresh investments in the Indian Equity Secondary Market, needs and must have one PINS account with only one designated bank in India. Notes:

  1. PINS account is applicable only for NRIs and not for resident Indians.
  2. It is only for trading in Indian markets and not in any other foreign markets
  3. It is applicable only for equity trades and not for Mutual fund investments.
• Q Why is PINS required?
  A

  For all Indian companies or companies listed on Indian stock exchanges, there are certain limits which have to monitored under FEMA regulations. For any company the foreign investment into that company cannot cross a certain limit. This limit is different from company to company and sector to sector. Also individually any NRI or a PIO cannot invest more than 5% in any Indian company.

• Q Can an NRI have two PINS account?
  A

  No, any NRI or a PIO can have only one PINS account in India. Say for example if he is having a PINS account with X bank and he wants to shift to Kotak Bank, then he has to close the PINS account there and open a PINS account with Kotak Bank.

• Q Do NRIs already having an account have to open another NRE/NRO account.
  A

  NRI 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 than under PINS including IPOs should be routed in his savings bank account.

• Q What are the types of Rupee accounts permitted to be maintained for PINS?
  A

  NRIs can maintain two types of account i.e. Non-Resident (External) Rupee Accounts (NRE Accounts) and Ordinary Non-Resident Rupee Accounts (NRO Accounts).

• Q Can an NRI have investments under PINS on repatriation and non-repatriation basis?
  A

  Yes. Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment can only be credited to NRO account.

• Q Under what circumstances investments made under PINS can be repatriated?
  A

  The repatriation of the sale proceeds, net of taxes, are allowed if the original purchase was made on repatriation basis and such investments were made out of funds from NRE account or by means of remittance from abroad.

• Q Is there any limit for purchase by NRIs under the PINS?
  A

  Yes. An NRI can purchase up to a maximum of 5% of the aggregate paid up capital of the company (equity as well as preference capital) or the aggregate paid up value of each series of convertible debentures as the case may be. For the purpose of this ceiling, investment under the Portfolio Investment Scheme on repatriation as well as non-repatriation basis will be clubbed together.
  
  There is an overall ceiling of 10% of paid-up equity share capital of the company/paid-up value of each series of convertible debentures for purchase by all NRIs/OCBs put together. The overall ceiling can be raised if the company concerned passes a special resolution to that effect in its general body meeting.

• Q What are the transactions covered under PINS?
  A

  For transactions to be covered under PINS it need to satisfy two conditions:

  1. Purchase from Indian Equity Secondary market
  2. As an NRI following transactions are allowed:
     • Fresh purchase from the secondary market as an NRI
     • Sale of shares, which were bought under PINS
• Q What are the transactions not allowed or are not covered under PIS?
  A

  Following transactions are not allowed or are not covered under PINS:

  1. Sale of shares, which were not bought under PINS. Like: Gifts, subscription to IPOs or shares bought as resident Indian, or received in bonus.
  2. Fresh subscription for the IPOs as an NRI
  3. Investment in Mutual Funds

  Examples:

  • Individual 'A' has bought some shares when he was resident Indian. Now he has become an NRI, can he sell these shares under PINS?
    
    Since these shares were not bought by A under PINS (as they were acquired when he was a resident Indian), these shares cannot be sold under PINS.
  • 'A' has bought some shares under PINS, now he has gifted those shares to 'B', who is also an NRI. Can 'B' sell these shares under PINS?
    
    Although these shares were purchased under PINS, but for B still these shares are received as gift, so B can not sell these shares under PINS.
• Q Can money be transferred from NRE account to NRO account?
  A

  Yes; money can be freely transferred from NRE account to NRO account.

• Q Can money be transferred from NRO account to NRE account?
  A

  No, money cannot be transferred from NRO account to NRE account. Money even by error if transferred from NRE account to NRO account, it cannot be transferred back to NRE account.

• Q What is Non-PINS?
  A

  Non-PINS is an account for which the transactions are not reported to RBI. This account takes care of selling of all those shares which are not allowed under PINS. Shares acquired under IPO or received as gift or bought as resident Indian can be sold under Non-PINS account.

• Q Why is Non-PINS required?
  A

  RBI under FEMA guideline, primarily ensures that the overall upper limit of foreign investments in any company is not breached. Therefore it is essentially interested in monitoring all the fresh investments done by NRI/PIOs in any Indian company.
  
  Under IPO, it is the responsibility of the company to inform RBI of the shares it is allotting to NRIs, therefore these shares are not covered under PINS.
  
  Shares bought as resident Indian, do not confer the ownership right to any NRI as a foreign body, therefore these shares are also not covered under PINS.
  
  While declaring bonus, it is like a fresh issue of shares at zero cost, therefore the responsibility is of the company to inform RBI about the shares it is providing to NRIs. Also since bonus is provided to all, overall percentage holding remains the same.
  
  While investing in MF, the voting right or the ownership of the shares remains with the AMC/trust and not the individual investing in the MF. Therefore, here also reporting is not required and these transactions are covered under Non-PINS.
  
  For taking care of all such investments, Non-PINS account is required,

Trading Account

• Q What is Trading Account ?
  A

  Trading accounts is used to place-execute the order over respective stock exchange. NRI's can transact over registered Indian stock exchange National stock exchange (NSE) & Bombay stock exchange (BSE) through the trading account
  
  NRE Trading Code -> NRE Saving Account & NRE Pins Account
  
  NRO Trading Code -> NRO Saving Account & NRO Pins Account

Demat Account

Depository Participant ( DP )

• Q You now need to open separate demat account.
  A

  Demat refers to Dematerialization. Demat Account is essentially used for holding shares. In a transaction, if a purchase transaction is punched in and the order is successfully executed at the exchange the demat account is credited by the said number of shares and in case of a sell order the Demat account is debited with the said number of shares.
  
  NRI Demataccounts : Features

  1. Demat account can be held jointly or singly as per the preference of the customer.
  2. Nomination facility is provided on the Demat accounts.
  3. Demat account helps to maintain the transactions details such as the date of purchase; cost of the transaction; selling price of the transaction etc.
• Q What is dematerialization?
  A

  Dematerialization is the process of converting the securities held in physical form (certificates) to an equivalent number of securities in electronic form and crediting the same to the investor's demat account. Dematerialized securities do not have any certificate numbers or distinctive numbers and are dealt only in quantity i.e. the securities are fungible.

• Q Is dematerialization mandatory? Can I hold the shares in physical form?
  A

  Dematerialization of your holdings is not mandatory. You can hold your securities either in demat form or in physical form. You can also keep part of your holdings (in the same scrip) in demat form & part in physical form. However, a selected list of securities announced by SEBI can be traded only in demat form in the stock exchanges.

• Q Where can an NRI/PIO open a demat account?
  A

  NRI/PIO can open a demat account with any Depository Participant [DP] of NSDL. The NRI/PIO needs to mention the type [' NRI' as compared to ' Resident'] and the sub-type ['Repatriable' or 'Non-Repatriable'] in the account opening form collected from the DP.

• Q Does an NRI need any RBI permission to open a demat account?
  A

  No permission is required from RBI to open a demat account. However, credits and debits from demat account may require general or specific permissions as the case may be, from designated banks.

• Q Can securities purchased under repatriable and non-repatriable category be held in a single demat account?
  A

  No. An NRI must open separate demat accounts for holding -repatriable' and 'non-repatriable' securities.

• Q Can investments made under different schemes be held under a single demat a/c?
  A

  No. Securities received against investments under 'Foreign Direct Investment scheme (FDI)', 'Portfolio Investment scheme (PIS)' and 'Scheme for Investment' on non - repatriation basis have to be credited into separate demat accounts. Investment under PIS could be on repatriation or non - repatriation basis. Investment under FDI scheme is on repatriation .

• Q Can an NRI and person resident in India have a joint demat account?
  A

  Yes. For the purpose of determining ownership of holding, the first holder is taken into account. Hence, even though other joint holders may be persons resident in India, they can jointly open a NRO account.

• Q Can an NRI nominate or be nominated in depository account? Whether such nominee can be person resident in India?
  A

  Yes.

• Q What is the procedure of Dematerialization?
  A

  Client submits a Demateralization Request Form (DRF) form along with the physical share certificate to thebackoffice/ DP (Depository Participient) who in turn forwards it to the Registrar & Transfer agent for confirmation from the company. After the confirmation is received the client a/c is credited.

• Q Do NRI's need RBI permission for dematerialization / rematerialisation of securities?
  A

  No special permission is required. Holding securities in demat only constitutes change in form and does not need any special permission. However, only those physical securities which already have the status as NR - Repatriable / NR- Non-Repatriable can be dematerialised in the corresponding Depository Accounts. Please keep a record of all your shares certificates and a verified copy of your share certificate and DRF form with you, while submitting the originals for dematerialization.

• Q Whether NRI can apply through more than one designated branch?
  A

  No. Each NRI has to select one branch for the purpose of investment under Portfolio Investment Scheme.

• Q Can I dematerialise any share certificate?
  A

  You can dematerialise only those certificates that are already registered in your name and are in the list of securities admitted for dematerialisation at NSDL.

• Q How long does the dematerialisation process take?
  A

  Dematerialisation normally takes about 30 days.

• Q Can my electronic holdings be converted back into certificates?
  A

  Rematerialisation is a process of converting electronic holdings back into certificates. You will have to submit a Remat Request Form(RRF) to the depository participant (DP) who generate a RRN and will forward the request to the registrar. The Registrar will print the certificate and forward it to the investor.

• Q How would I get my dividend / interest or other cash entitlements?
  A

  The relevant company obtains the details of beneficiary holders and their holdings from NSDL. The payment to the investors will be made by the company through the ECS (Electronic Clearing Service) facility or by issuing warrants on which your bank account details are printed. The bank account details will be those which you would have mentioned in your account opening form or changed thereafter.

• Q How would I get my bonus shares or other non-cash entitlements?
  A

  The relevant company obtains the details of beneficiary holders and their holdings from NSDL. Your entitlement will be credited by the company directly in your NSDL depository participant (DP) account.

• Q How will the investor confirm that bonus/rights entitlement is credited into the account?
  A

  The issuer Registrar and Transfer (R&T) agent for bonus/rights issue would send an allotment advice to the investor and the depository participant (DP) would send a transaction statement showing credit into his account. The investor can confirm his entitlement by comparing the quantity shown in the advice and statement of transaction given by his DP.

• Q Can I freeze my account?
  A

  The system provides the facility to freeze the depository participant (DP) accounts for any debits or for both, debits and credits. In an account which is "freezed for debits", no debits will be permitted from the account, till the time it is unfrozen.

• Q What are the different securities available for dematerialisation?
  A

  Shares, scrips, stocks, bonds debentures, debenture stock or other marketable securities of similar nature of any incorporated company or body corporate including underlying shares of American Depository Reciepts(ADRs) and Global Depository Reciepts(GDRs). Units of mutual funds, rights under collective investment schemes and venture capital funds, commercial paper, certificate of deposit, securitised debt, money market instruments and unlisted securities are the securities available for dematerialisation.
  
  The investor should note that he can convert physical form of securities into book entry form in NSDL depository system only if the company which has issued the securities has entered into an agreement with NSDL to offer demat facility.

• Q Is it necessary to have a depository account in case I apply for shares in Rights Issue/IPO?
  A

  It is not necessary to have a depository account for applying shares through Rights Issue/IPO. The investor can apply shares in physical form also, however for your convenience and in order to eliminate the risks to investors on account of fake/forged certificates, bad deliveries, delays in transfer etc., settlement of all trades in securities of company making an IPO has to be in demat form only.

How to Open an NRI Account

To open an account with us you can get in touch with our contact centre or Website. Our Relationship manager will contact you for account opening formalities. You can also email us on nricustomerservice@kotak.com

• Q Procedures & Documentation
  A

  You can get started with the account once the following formalities are completed:

  1. NRI- Trinity Account - A combination of Banking, Demat and Trading accounts, these will be provided to you by Kotak Securities, so that your online trading experience is seamless and effortless.
  2. Request Letter for PINS permission

  Note: We will open your PINS account and Savings account with Kotak Mahindra Bank Limited.

• Q Documentation
  A

  The following documents would be required to open an NRI account:

  Mandatory's

  1. Passport (Copy of Name, Address and Photo pages along with issue and expiry page)
     
     If Indian passport provided then Visa / resident permit is compulsory. If foreign passport / Indian passport with place of birth outside India then PIO / OCI proof required Copy of PIO/OCI card is mandatory for NRI/ Foreign Nationals
  2. Visa Copy (If Passport is issued in India or work permit of UAE) Valid Visa copy with latest immigration stamp
  3. Pan card is a mandatory requirement.
  4. Demat proof [Demat client master.] [In case client is moving units from existing demat ]
  5. In case of Merchant Navy NRI Client, Mariner's declaration or certified copy of CDC (Continuous Discharge Certificate) is to be submitted

  Apart from these you can provide any combination of the following documents as proof of identity, address, signature and bank proof as well. [Foreign and Indian address proof required]

  1. Electricity/Telephone Bill - Landline )- Not more than 3 months old
  2. Latest three month transaction bank passbook / bank statement with cancel chq leaf
  3. Banker's verification (from a Schedule commercial bank only should be registered in India) same required on bank letter head with bank employee name, signature, employee code and designation
  4. Driving license (Name, Address and photo pages along with issue and expiry date page)
     
     Note - Copies of Proof submitted by client should be Self- Attested which means copy of proofs must be signed by the client and original must be presented for verification. If Original not presented for verification, and then the document has to be Attested/notarized.
  5. For further details email us on nricustomerservice@kotak.com

Investing by NRI's

• Q What steps does an NRI needs to take to start investing in the Indian stock Market?
  A

  1. An NRI should open a new bank account (NRE/NRO) with designated bank branch, which is approved by RBI (Reserve Bank of India) for this purpose.
  2. He should apply for a general approval for investment in Indian Stock Market through his designated bank branch.
  3. He should open a Demat Account with a Depository Participant to hold his shares.
  4. He needs to register with a broker to execute his buy/sell orders on the stock exchange(s).
  5. Request Letter for PINS permission
• Q In case a person who is resident in India becomes a non-resident, will he/she be required to change the status of his/her holding from Resident to Non-Resident?
  A

  As per section 6(5) of FEMA, NRI can continue to hold the securities, which he/she had purchased as a resident Indian, even after he/she has become a non-resident Indian, on a non-repatriable basis.

• Q In case an NRI becomes a resident in India, will he/she be required to change the status of his/her holding from Non-Resident to Resident?
  A

  Yes. It is the responsibility of the NRI to inform the change of status to the designated bank branch, through which the investor had made the investments in Portfolio Investment Scheme and the DP with whom he/she has opened the demat account. Subsequently, a new demat account in the resident status will have to be opened, securities should be transferred from the NRI demat account to resident account and then close the   NRI demat account.

• Q Can NRIs invest in shares, debentures and units of mutual funds in India?
  A

  NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.
• Q Can NRIs purchase existing shares / debentures of Indian companies by private arrangement?
  A

  Yes. Reserve Bank permits NRIs on application in form FNC 7, to purchase shares / debentures of existing Indian companies on non-repatriation basis. An undertaking about non-repatriation is to be given in form NRU.
• Q Can an NRI purchase securities by subscribing to public issue? What are the permissions/approvals required?
  A

  Yes. The issuing company is required to issue shares to NRI on the basis of specific or general permission from GoI/RBI. Therefore, individual NRI need not obtain any permission.
• Q Does NRI require any permission to subscribe to Rights issue of a company?
  A

  No. The Same can applied directly by customer with the necessary forms filled and sent to the registrar of the companies. The Broker does not play any role in this process.
• Q Does NRI require any permission to receive bonus shares?
  A

  No.
• Q Can an NRI purchase or sell shares or convertible debentures on a stock exchange in India on repatriation and/or non-repatriation basis under portfolio investment scheme?
  A

  NRIs / PIOs can purchase / sell shares / convertible debentures of Indian companies on Stock Exchanges under the Portfolio Investment Scheme. The rules relating to this scheme are as given below:

  1. These trades can be done only through a registered broker on a recognized stock exchange.
  2. NRI shall designate a branch of an authorized dealer and route all his/her transactions through this branch of the authorized dealer.
  3. NRI takes delivery of the shares purchased and gives delivery of shares sold.
  4. NRI shall abide by the directions given by RBI/SEBI or such authority if the transaction results in the breach of ceilings stipulated for NRI holding in the company/scheme.

  The sale of shares will be subject to payment of applicable taxes.

• Q What is meant by investment through direct subscription route?
  A

  As per the regulations NRIs are allowed to invest up to a certain percentage of the total paid up capital of the company by directly subscribing to the equity/convertible debentures of the company either though a public offering made by the company or through private placements on one to one basis. Regulations provide for different ceilings on such investments based on the industry to which the company belongs and also the nature of investments (repatriation / non-repatriation basis).
• Q Do NRIs need any permission of RBI to subscribe for IPOs or Private placements of equity shares/convertible debentures of existing or new companies?
  A

  No. NRIs do not require any permission to invest though Initial Public Offerings (IPOs) or Private placements. In such cases, the Issuing company should comply with all necessary regulations for issuing securities to a person resident outside India.
• Q Do NRIs need approvals from RBI for selling securities acquired through IPOs/Private Placement?
  A

  No. NRIs can sell such shares/debentures on the Exchange without any approval. However, while seeking the credit of sale proceeds to NRE/NRO account, the bank should be provided with the details regarding date of allotment and cost of acquisition to calculate the taxes, if any.
• Q What are the permissions required for the transfer of securities by NRI/ PIO through off-market trade (transfers outside the purview of Portfolio Investment Scheme of RBI)?
  A

  The table given below summarizes the permissions required for the off-market transfer:

  From	To	Transaction	Permissions Required
  NRI	NRI	Sale or Gift	General permission, no specific permission to be taken*
  NRI	Resident Indian	Sale	General permission
  NRI	Resident Indian	Gift	General permission, no specific permission to be taken
  Resident Indian	NRI	Sale or gift	Subject to certain restrictions

  * Provided that the person to whom the shares are being transferred has obtained prior permission of Central Government to acquire the shares, if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied filed in which the Indian company whose shares are being transferred is engaged.

• Q What are the permissions required for the transfer of securities by NRI/ PIO through off-market trade (transfers within the purview of Portfolio Investment Scheme of RBI)?
  A

  Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way of sale under private arrangement or by way of gift (except by NRIs to their relatives as defined in Section 6 of Companies Act, 1956 or to a charitable trust duly registered under the laws in India) to a person resident in India or outside India without prior approval of the Reserve Bank.

  Definition of "relative" as given in Section 6 of Companies Act, 1956.

  A person shall be deemed to be a relative of another, if, and only if:

  • they are members of a Hindu undivided family ; or
  • they are husband and wife ; or
  • the one is related to the other in the manner indicated in Schedule IA (as under)

  1. Father
  2. Mother (including step-mother)
  3. Son (including stepson)
  4. Son's wife
  5. Daughter (including step-daughter)
  6. Father's father
  7. Father's mother
  8. Mother's mother
  9. Mother's father
  10. Son's son
  11. Son's son's wife
  12. Son's daughter
  13. Son's daughter's husband
  14. Daughter's husband
  15. Daughter's son
  16. Daughter's son's wife
  17. Daughter's daughter
  18. Daughter's daughter's husband
  19. Brother (including step-brother)
  20. Brother's wife
  21. Sister (including step-sister)
  22. Sister's husband