Know All About NRE PIS Accounts

A solid investment in NRE PIS and NRE non-PIS accounts can help your money grow and provide you with an alternate source of regular income. As we know, there is no investment scheme that offers a high rate of returns at low risk. Risk and returns in most financial schemes are inversely proportional. However, investments can bear good fruits if all factors are considered while investing. NRE PIS or Non-Resident External PIS accounts are the investment instruments that are growing in popularity for their ability to yield higher returns.

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What is an NRE PIS?

Also known as Portfolio Investment Scheme (PIS), the NRE PIS scheme is explicitly defined in the Foreign Exchange Management Act, 2000 under Schedule-3. Under this, Non-Resident Indians can trade in shares and convertible debentures of Indian companies listed in an Indian recognized stock exchange.

What is an NRE PIS Bank Account?

NRE PIS bank account is popular among current investors, primarily NRI retail investors. The NRE PIS Bank Account is a form of Saving Bank Account specially customized for Non-resident Indians.

This scheme has given the Non-resident Indians the special allowance of PIS from the Reserve Bank of India, which motivates them to invest in a resurgent economy like India. Moreover, it enables the NRIs to trade Indian stocks by routing completed purchase/sale transactions through their respective NRE PIS account with a referenced bank branch.

Several options can help ensure an alternative source of income like NRE PIS, NRE Non-PIS Account, PIS, Non-PIS Account, PIS Demat Account, and PIS for NRI to choose your options carefully.

For any Non-resident Indians, who would want to use their money earned abroad for trade or investing in Indian stocks, the Non-Resident External (NRE) PIS account becomes a reliable option.

Salient Features NRE PIS Account

The sole objective of the Non-Resident External PIS account is to assist Non-Resident Indians to operate in securities in India such as Mutual Funds, Equity Stocks, IPOs, Bonds, and ETFs.
Non-Resident Indians can make the optimum use of their income earned abroad and diversify their portfolio by investing in India.
An NRI, Person of Indian Origin (PIO) & OCU Accounts, can open an NRE PIS account.
An individual NRI is authorized to operate only one NRE PIS Account. If under any circumstance, a Non-Resident Indian plans to open another NRE PIS Account or shift to a different bank, they would have to close their existing NRE PIS account.
The Reserve Bank of India takes note of every transaction, which is processed using the NRE PIS account. The respective bank of the NRI sends the report to the RBI.
The NRI first needs to transfer a stipulated amount of funds to their NRE PIS account before commencing trading in the Indian stock markets.
Due to its popularity, all the leading banks in India, including the State Bank of India, HDFC Bank, Yes Bank, ICICI, and Axis Bank, present the NRE PIS account facility to their NRI customers. In addition, most banks have got designated branches that have been licensed to issue this Portfolio Investment Scheme.
If required, the Non-Resident Indians can consent to a resident or non-resident Power of Attorney (PoA) holder to manage this NRE PIS account on their behalf.

What are the benefits available for an NRE PIS Account?

A Non-Resident External bank account is fully compatible in the sense that the funds accumulated in the NRE account can be taken outside India without informing RBI. Non-resident Indians can invest their money depending on their capacity to absorb risk and short-term and long-term needs.

The best part of opting for an NRE PIS account is the flexibility to choose between equity and debt components in the various alternatives to get the best funds.

For the convenience of the Non-resident Indians, their funds can be converted into any foreign currency of their choice. Moreover, their money can also be transferred from an NRE account to their respective NRO account as and when required.

On the other hand, a Non-PIS account is just another run-of-the-mill Savings Bank Account opened by an NRI (can be NRE or NRO).

Key Facts About NRE PIS Account

The Non-resident Indians have an option to choose a specific amount of payout with different sets of stocks and convertible debentures on BSE & NSE. It is mandatory to open the NRE Saving Bank Account first before proceeding with opening an NRE PIS Account.

Following this process, the respective bank would have to apply for a special PIS Certificate based on the PIS Application Form on behalf of the NRI.

Once all the formalities are completed and PIS permission is granted, it is digitally associated with the NRE bank account to formally be regarded as NRE PIS Account. Whenever the NRI carries out any transactions through their NRE Account, it is immediately reported to RBI. It is done to ensure the safety of NRE PIS accounts and avoid any misuse.

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^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%

¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.

**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).

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