What are the investment limits for NRIs under FEMA and PIS?

What are the investment limits for NRIs under FEMA and PIS?

NRIs (Non-Resident Indians), including students treated as NRIs under FEMA can invest in India across several asset classes. The applicable limits and conditions depend on the investment route, including general FEMA provisions and the Portfolio Investment Scheme (PIS) for eligible exchange-traded equity investments.

Investment scope under FEMA

FEMA permits NRIs to invest across various asset classes when funds are routed through authorised banking channels.

  • Unlimited investments allowed: Listed equity shares, mutual funds, corporate bonds and NCDs, real estate (excluding agricultural land), and IPOs/NCD offerings via NRO accounts.
  • Mode of investment: Repatriable via NRE accounts; non-repatriable via NRO accounts.
  • Restrictions: NRIs cannot invest in PPF, NSC, or other small savings schemes designed for resident Indians.

Facilities for NRI students under FEMA

Students going abroad are treated as NRIs and receive the applicable account, remittance, and investment facilities available to NRIs.

  • Remittance facility: Up to USD 1 million per financial year can be repatriated from an NRO account. This repatriation limit applies per PAN, per financial year, and may include proceeds from the sale of property, investments, or inherited/gifted assets. The USD 1 million limit does not apply to NRE accounts.
  • Account access: Open and operate NRE and NRO accounts and invest in mutual funds, bonds, and equities through these accounts.
  • Loan/expense support: Use NRE/NRO funds to repay education loans in India and receive inward remittances from relatives for education or living expenses.

Portfolio Investment Scheme (PIS)

PIS allows NRIs to buy and sell shares and convertible debentures of Indian companies on recognised stock exchanges through a designated bank.

  • Scope: Equity delivery only. PIS does not apply to F&O, currency, commodities, or mutual funds.
  • Repatriation: Investments through NRE PIS are repatriable, while investments through NRO PIS are non-repatriable.
  • Segregation: Securities purchased under PIS must be sold through the PIS route; Non-PIS and PIS cannot be interchanged.

Investment limits under PIS

RBI prescribes company-level limits for NRI holdings under PIS.

Limit typeThresholdNotes
Individual NRI limitUp to 5% of paid-up capital/each debenture seriesApplies per listed Indian company
Aggregate NRI limitUp to 10% of paid-up capital/debenture valueIncludes all NRI holdings combined
Enhanced aggregate limitUp to 24%If approved by shareholders through a special resolution

RBI monitoring of NRI/FPI holdings

RBI monitors foreign holding levels to prevent prescribed investment limits from being breached.

  • Caution list: Triggered when combined NRI/FPI holdings approach the applicable limit. Further purchases may require approval.
  • Ban list: Once the applicable limit is reached, fresh NRI/FPI purchases under PIS are not permitted.

Restrictions on transfer of PIS-purchased shares

Shares acquired under PIS must be traded through recognised stock exchanges. Private or off-market transfers are restricted.

  • No private sale/transfer: Off-market transfers are not permitted without the applicable approval.
  • Gifting exceptions: Shares may be gifted to specified relatives or registered Indian charitable trusts, subject to applicable conditions and approvals.
Note: Ensure that the account and investment route being used PIS or Non-PIS matches the applicable product and transaction requirements.

What if...

ScenarioSolution
You held a PPF before becoming an NRIYou may continue to hold it, but cannot extend or contribute further.
You wish to repatriate funds from an NRO accountRepatriation is permitted up to USD 1 million per PAN per financial year, subject to applicable requirements.
You want to invest in IPOs as an NRIApply through the applicable NRI banking route, subject to the requirements of the offering.
You buy shares after the permitted investment limit has been reachedFresh purchases may be restricted or rejected under the applicable PIS limits.
You transfer PIS shares privatelyOff-market transfers are restricted and may require applicable approval.
You are an NRI studentYou can invest through the applicable NRI account, subject to FEMA requirements, and should update your KYC and bank status after moving abroad.