Seven things NRIs should keep in mind when choosing a wealth manager back in India

NRE Bank Account: Designed for NRIs earning income in foreign currency but intending to convert and remit it in Indian Rupees, the NRE account facilitates such transactions. Funds from the NRE account can be utilized for investments in Indian companies. Moreover, all deposits or fund balances from the NRE account are fully repatriable, allowing NRIs to transfer them abroad without restrictions.
​
NRO Bank Account: NRIs seeking to manage income earned within India can opt for an NRO savings bank account. Since NRIs maintain Indian citizenship, any income received in Indian currency, such as rent, pension, business income, or dividends, should be deposited into an NRO account. Unlike NRE accounts, the balance and interest earned in NRO accounts are not entirely repatriable. NRIs can repatriate a maximum of USD 1 million per financial year from their NRO account.

After opening an NRI bank account, NRIs can opt to invest in India through either the Portfolio Investment Scheme (PIS) or non-PIS mode. PIS is an RBI scheme enabling NRIs to invest in listed Indian companies on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Certain banks authorized by the RBI issue the PIS letter to NRIs, and all transactions conducted through the NRI PIS account are reported to the RBI.

However, NRIs also have the flexibility to invest in India using a non-PIS NRO trading account, making PIS optional, and allowing trading without Portfolio Management Services (PMS).

The trading account functions similarly for residents and non-residents, serving as a platform to place and execute buy and sell orders.

Through an NRI trading account, NRIs can engage in trading activities such as buying and selling stocks listed on the BSE and NSE, trading in Futures and Options (F&O) contracts, or investing in mutual funds. NRIs have the option to link either an NRE or NRO bank account to their trading account, enabling them to invest on either a repatriation or non-repatriation basis.

An NRI Demat Account is crucial for receiving delivery of shares and securities in dematerialized form. This account ensures the safekeeping of all equity and mutual fund investments held by NRIs, providing convenience and security.

1.NRIs are allowed to invest up to 5% of the paid-up capital of listed Indian company in recognized Stock exchange on repatriation or non-repatriation basis

2. NRIs are allowed to invest up to 5% of the paid-up value of each series of debentures of listed Indian companies on repatriation or non-repatriation basis.

3. Investments by all NRIs clubbed together cannot exceed 10% of paid-up capital of the Indian listed company or paid-up value of each series of debentures of the company.

4. The above aggregate ceiling can be raised to 24% if the Indian company passes a special resolution to that effect.

5. To trade in the derivatives market, NRIs need a custodial participant code. NRI investments should be on a non-repatriation basis and Rupee funds held in India should be used.

1. Short Selling: NRIs are not permitted to engage in short selling.

2. Prohibited Sectors: NRIs are prohibited from investing in specific sectors, including lottery business. gambling and betting, including casinos, Nidhi companies, real estate business or construction of farmhouses.

3. They also cannot trade in Transferable Development Rights (TDRs).

4. They cannot invest in companies that manufacture cigars, cheroots, cigarillos, and cigarettes, whether of tobacco or tobacco substitutes.

5. They cannot invest in activities/sectors not open to private sector investment, such as atomic energy and railway operations. Also banned for NRIs are firms who have foreign technology collaboration, including licensing for franchise, trademark, brand name, and management contracts.

6. NRIs must trade on a delivery basis and are not allowed to engage in intra-day trading.

7. NRIs are prohibited from trading in commodity derivatives.

8. NRIs need to obtain RBI approval for trading in scrips under the caution list. The caution list comprises stocks where NRI investments are nearing the threshold holding limit. NRIs are not allowed to trade in stocks listed under the ban list. The ban list comprises stocks where NRI investments have reached the threshold limit set by the RBI.

1. Government dated securities
2. Treasury bills (T-bills)
3. Units of domestic mutual funds;
4. Bonds issued by a Public Sector Undertaking (PSU) in India
5. Shares in Public Sector Enterprises being disinvested (partial dilution) by the Central Government
6. Bonds/ units issued by Infrastructure Debt Funds
7. Listed non-convertible/ redeemable preference shares or debentures
8. Perpetual debt instruments (with an overall ceiling of 24%) and Debt capital instruments issued by banks in India to augment their capital
9. Initial Public offerings
10. National Pension System

1. Government dated securities
2. Treasury bills (T-bills)
3. Units of domestic mutual funds
4. Units of Money Market Mutual Funds
5. Listed non-convertible/ redeemable preference shares or debentures
6. Initial Public offerings
7. National Pension System
8. Chit funds