Are NRIs permitted to transfer PIS-purchased shares through private arrangements?
No, NRIs are not permitted to privately transfer shares acquired under the Portfolio Investment Scheme (PIS) without prior approval from the Reserve Bank of India (RBI). PIS-compliant shares must be transacted only through recognised stock exchanges in India.
Key restrictions under FEMA
- No private sale or transfer:
Shares purchased under PIS cannot be sold or transferred via off-market or private arrangements. - Only stock exchange route allowed:
Sale of such shares must take place through the secondary market on the exchange. Exception for gifts:
NRIs may gift shares to:
- Relatives as defined under Section 6 of the Companies Act, 1956
- Registered charitable trusts in India
- Even in these cases, prior RBI approval is required if the recipient is not classified as a 'relative'.
What if...
| Scenario | What you should know |
|---|
| You want to gift PIS shares to a sibling or parent | This may be permitted, but prior RBI approval is advisable if the recipient isn’t in the Companies Act's 'relative' definition |
| You transfer shares privately to another NRI | This is not allowed without RBI approval, regardless of relationship |
| You gift shares to a charitable trust | Must be a registered trust in India and may still require RBI clearance |
To ensure full compliance with PIS rules, always transact through stock exchanges and consult FYERS support before initiating any off-market or gift-based transfers.
Last updated: 24 Jun 2025
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