The Scheme:

Under this scheme the NRI’s and ^* Overseas Corporate Bodies (OCB’s) are permitted to purchase shares/debentures of Indian Companies or units of Domestic Mutual Funds on the floor of stock exchange/s in India at the ruling market price.

^* In terms of the instructions received from Reserve Bank of India under circular No. A.P.(DIR Series) Circular No.13 dated 29/11/2001, Overseas Corporate Bodies henceforth shall not be permitted to invest under Portfolio Investment Scheme in India. However, any investments already made under Portfolio Investments Scheme by OCBs may continue to be held till such time the shares / convertible debentures acquired under such investments are sold on the Stock Exchange. The Banks in future thus will undertake only sale transactions on behalf of OCBs.

RBI has further clarified that OCBs will continue to enjoy the facility of opening and maintaining NRE accounts. Similarly, these are eligible for making investments under FDI under FEMA.

Validity Period:

The general permission is valid for a period of 5 years. Authorised dealers have been now empowered to renew the general permission/s given under Portfolio Investment Services for a further period of 5 years in case of individual NRIs. Hitherto, either to this renewal request for the general permission/s had to be routed through Authorised Dealers to Reserve Bank.

Disposal of Sale Proceeds:

General permission is granted to repatriate the sale proceeds of the shares/units sold and other accruals in the form of dividends/interest (if purchased originally out of NRE/FCNR account) subject to payment of Income Tax as applicable.

Ceiling on Investment:

• Portfolio Investment Services: The over all ceiling of 10% is applicable to the equity shares and convertible debentures issued by the company to all NRI investors taken together both on Repatriation and Non Repatriation basis.
• The over all ceiling can be raised to 24% instead of 10% if the company concerned resolves the same by way of a seperate resolution in the General Body Meeting. [The aggregate ceiling for FII investment i.e. 24% or 30%, as the case may be, will not include investment made by NRIs including Portfolio Investment Scheme].
• Individual NRI's can purchase upto 5% of the paid up equity capital/paid up value on each series of convertible debentures of the company.
• However, investment in domestic Mutual Fund can be done without any ceiling.