Investment in Companies:

NRIs, PIOs and OCBs may without any limit purchase on non-repatriation basis shares or convertible debentures of an Indian company issued by public issue or private placement or right issue.

Note: Purchase of shares or convertible debentures of an Indian company engaged in agricultural/ plantation activities or real estate business or construction of farm houses or dealing in Transfer of Development Rights and Nidhi companies and chit funds shall not be permitted.

Investment in Firms and Proprietary Concerns :

Non Resident Indian Nationals and Persons of Indian Origin resident outside India may invest by way of contribution to the capital of a firm or proprietary concern in India provided:

• Amount invested is received either by inward remittance through normal banking channels or out of permissible accounts maintained with an authorised dealer/bank.
• The firm or proprietary concern is not engaged in agricultural/plantation activity or real estate business.
• Amount invested shall not be eligible for repatriation.

Purchase And Sale Of Securities Other Than Shares Or Convertible:

A Non Resident Indian or Person of Indian Origin or an Overseas Corporate Body may, without limit, purchase on repatriation basis:

a. Government dated securities (other than bearer securities) or treasury bills or units of domestic mutual funds;
b. Bonds issued by a public sector undertaking (PSU) in India.

A Non Resident Indian or an Overseas Corporate Body may, without limit, purchase on non-repatriation basis:

1. Units of Money Market Mutual Funds
2. Non Convertible Debentures
3. Commercial Papers (OCBs are not permitted)
4. Make deposits with Companies

NRIs and PIOs may purchase/sell shares and/or convertible debentures of an Indian company, through a registered stock broker on a recognised stock exchange, subject to the following conditions:

The NRI/PIO designates a branch of an authorised dealer for routing his transactions relating to purchase and sale of shares/convertible debentures under this scheme and route all such transactions only through the branch so designated;

The paid up value of shares of an Indian company purchased by each NRI or PIO both on repatriation and on non-repatriation basis does not exceed 5% of the paid up value of shares issued by the company concerned.

The paid up value of each series of convertible debentures purchased by each NRI/PIO both on repatriation and non-repatriation basis does not exceed 5% of the paid up value of each series of convertible debentures issued by the company concerned.

The aggregate paid up value of shares of any company purchased by all NRIs and PIOs and OCBs does not exceed 10% of the paid up capital of the company and in the case of purchase of convertible debentures the aggregate paid up value of each series of debentures purchased by all NRIs, PIOs and OCBs does not exceed 10% of the paid up value of each series of convertible debentures; provided that the aggregate ceiling of 10% may be raised to 24% if a special resolution to that effect is passed by the General Body of the Indian company concerned.

The NRI or PIO investor takes delivery of the shares purchased and gives delivery of the shares sold.

Payment for purchase of shares and/or debentures is made by inward remittance in foreign exchange through normal banking channels or out of funds held in NRE/FCNR Account maintained in India if the shares are purchased on repatriation basis and by inward remittance or out of funds held in NRE/FCNR/NRO/NRNR*/NRSR* account of the NRI/OCB concerned maintained in India where the shares/debentures are purchased on non repatriation basis.

The net sale/maturity proceeds of shares and/or debentures of an Indian company purchased by NRI/PIO under this scheme may be allowed by the designated branch of the authrorised dealer to be:

Credited to NRSR* account of the NRI/PIO investor where the payment for purchase of shares and/or debentures sold was made out of funds held in NRSR* account or

Credited to his NRO/NRSR* account where the shares and/or debentures were purchased on non-repatriation basis, at the investors option, or

Remitted abroad or credited to his NRE/FCNR/NRO/NRSR* account where the shares and/or debentures were purchased on repatriation basis at the investors’ option.

• for transfer of shares/convertible debentures held by a person resident outside India other than NRI/OCB to any person resident outside India provided that the transferee should have obtained permission of Central Government if he had any previous venture or tie-up in India through investment in any manner or a technical collaboration or trade mark agreement in the same field or allied field in which the Indian company whose shares are being transferred is engaged;
• NRIs/OCBs are permitted to transfer shares or convertible debentures of Indian ompany to another NRI/OCB;

A person resident outside India is permitted to transfer shares/debentures of an Indian company to a resident by way of gift. NRIs/PIOs/OCBs are not allowed to buy shares in print media.

*Regarding NRNR/NRSR accounts, please see Chapter on Bank Accounts.