The NRI’s guide to choosing the right kind of account to invest in Indian stocks

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Mint breaks down which option would be the best fit for your needs and how this choice can shape your investments. But first, what’s a portfolio investment scheme? It’s an arrangement introduced by the Reserve Bank of India to enable NRIs to invest in the stocks of Indian companies, and allows for both repatriation and non-repatriation of profits. But there are differences in PIS and non-PIS accounts that you need to consider before deciding on one.

A PIS account linked to non-resident external (NRE) accounts might be the right choice if your priority is to repatriate your profits and funds back to your home country. However, the process of opening a PIS account is complex. As Amit Lalan, director at online trading platform Upstox, explains, PIS accounts require permission from both a bank and RBI, which can make the onboarding process time-consuming, typically about two weeks.

Additionally, PIS accounts come with higher operational and compliance costs due to the regulatory oversight involved. PIS accounts are also subject to RBI’s restrictions on the maximum foreign or NRI shareholding allowed in a company. For example, if HDFC Bank has hit the cap of maximum foreign shareholding, no new NRI PIS purchases will be allowed in the stock.

Restrictions also apply to trading in futures and options. Also read | Why this Luxembourg-based couple invests in Indian stocks only A non-PIS account, on the other hand, offers a simpler and more flexible approach to investing in Indian securities. Unlike PIS accounts, non-PIS accounts can be opened directly with a broker without needing RBI permission, making the onboarding process faster and more straightforward, said Lalan.