The first surprise for a fresh NRI who wants to buy ten shares of HDFC Bank on the NSE is that the normal demat-and-trading account opened during their resident years cannot legally execute that order any more. RBI's Portfolio Investment Scheme (PIS) framework mandates that every secondary-market stock transaction by an NRI route through a Designated Authorised Dealer (AD) bank. Set up the PIS infrastructure correctly and the operational experience matches a resident trader's. Skip it and either the broker refuses the order or RBI later flags the resident-account use as a FEMA violation. The PIS framework intersects with three other operational choices: which bank to designate, which broker / platform to use (Vested, IndMoney, Stockal for US-side; HDFC Securities, ICICI Direct, Kotak Securities, Zerodha NRI for India-side), and whether to set up the repatriable or non-repatriable scheme. Here is the 2026 master account-opening playbook.
PIS — what it is and why it exists
RBI introduced the Portfolio Investment Scheme via FEMA Notification 20/2000 to allow NRIs to invest in Indian listed shares on the secondary market under a controlled framework. Key features:
- Mandatory for NRI's secondary market equity purchase / sale on NSE / BSE
- Routed through a single Designated AD bank per scheme (Repatriable or Non-Repatriable)
- Bank reports purchases / sales fortnightly to RBI
- Per-NRI cap: 10% of paid-up capital of any single Indian company
- Aggregate NRI cap: 10% per company; can be raised to 24% with company-level special resolution
- Aggregate FII / FPI cap separate from NRI cap
- NRI cannot use PIS for: short-selling, futures and options (separate non-PIS route via custodian + FPI), intra-day trading without delivery
PIS vs Non-PIS — the routing matrix
| Transaction type | Route | Bank involvement |
|---|---|---|
| Secondary-market equity purchase / sale (NSE / BSE) | PIS | Designated AD bank reports fortnightly |
| IPO subscription | Non-PIS | ASBA via NRE / NRO account; no PIS bank involvement |
| Mutual fund purchase | Non-PIS | NRE / NRO funded; no PIS |
| Rights issue subscription | Non-PIS | NRE / NRO funded |
| Bonus shares received | Non-PIS | No PIS reporting required; shares land in demat |
| Gift / inheritance of Indian shares | Non-PIS | Demat-to-demat transfer; FEMA reporting at receipt |
| ETF on NSE / BSE | Non-PIS | NRE / NRO funded; ETF treated as mutual-fund-equivalent |
| Sovereign Gold Bond (SGB) | Non-PIS (but NRIs barred from fresh subscription since 2023) | n/a for new subscription |
| Government Securities (G-Sec) via NDS-OM Retail Direct | Non-PIS | NRE / NRO funded |
| Corporate Bond purchase secondary market | Some require PIS (specific eligibility per bond) | Check issue prospectus |
Repatriable vs Non-Repatriable PIS
| Scheme | Funding source | Sale proceeds destination | Repatriability |
|---|---|---|---|
| Repatriable PIS | NRE Savings (foreign-earned funds) | NRE Savings | Sale proceeds fully repatriable; no USD 1M cap |
| Non-Repatriable PIS | NRO Savings (India-source funds) | NRO Savings | Subject to USD 1M / FY repatriation cap via Form 15CA/15CB |
An NRI can hold both schemes simultaneously — one PIS Repatriable at Bank A, one PIS Non-Repatriable at Bank B (or both at the same bank, treated as separate accounts).
The choice depends on the source of investment funds and the repatriation intent. Most working NRIs maintain a Repatriable PIS funded from NRE — preserves flexibility to repatriate sale proceeds without cap.
Designated PIS banks — the 2026 shortlist
| Bank | Indicative annual PIS fee | Online application? | Special note |
|---|---|---|---|
| HDFC Bank | ~₹2,000-3,000 | Yes — app-based | Largest NRI PIS book; smooth integration with HDFC Securities |
| ICICI Bank | ~₹2,000-3,500 | Yes | ICICI Direct integration; US-corridor specialist |
| Kotak Mahindra Bank | ~₹2,500-4,000 | Yes | UAE-corridor strong; competitive forex |
| Federal Bank | ~₹1,500-2,500 | Yes | Lowest annual fee; large UAE/Gulf NRI book |
| Axis Bank | ~₹2,000-3,500 | Yes | Wide platform support |
| SBI | ~₹500-1,500 | Limited online; mostly branch | Cheapest; slowest turnaround |
| IndusInd Bank | ~₹2,500-4,000 | Yes | Strong HNI segment |
| YES Bank | ~₹2,000-3,500 | Yes | Limited US-NRI; FATCA cautious |
Most NRIs gravitate to HDFC PIS or ICICI PIS because of integrated NRE + NRO + PIS + broker accounts in one bank relationship. Federal Bank wins on fee for cost-conscious users; SBI is the cheapest but operationally slow.
Documents required
- Identity — Passport (Indian or OCI), valid foreign visa / work permit
- Address — Overseas address proof (utility bill, tenancy agreement, employment letter) + Indian address proof (Aadhaar / parent's address)
- Tax — PAN; FATCA / CRS self-declaration; W-9 for US-NRI
- Banking — Existing NRE + NRO with the same bank (typically; some banks require open-with-them)
- Photo — Recent passport-size; live photograph at video-KYC stage
- Power of Attorney — Optional for ops only; PoA in favour of resident relative for routine transactions (most NRIs operate directly via app)
- Anchor declaration — FEMA declaration of NRI status; CKYC
Application process — step by step
- Choose Designated AD bank (one per scheme); ensure NRE + NRO at that bank.
- Apply for PIS via bank's online portal or branch. Submit document set.
- Bank issues RBI PIS Permission Letter within 5-10 working days.
- Open demat account at the broker of choice (HDFC Securities, ICICI Direct, Kotak Securities, Zerodha NRI, Axis Direct, Vested via partner, IndMoney via partner).
- Link PIS bank + demat at broker; PIS-Linked Bank Account (PLB) mapping ensures all secondary-market trades route through PIS.
- Activate trading; the broker reports trades to the PIS bank; the PIS bank reports fortnightly to RBI in Form A2.
Total turnaround from initial application to first trade: typically 10-15 working days. Online-friendly banks (HDFC, ICICI, Kotak, Federal) often complete the cycle in 7-10 working days.
US-NRI platforms — Vested, IndMoney, Stockal
Three US-NRI-friendly platforms have emerged to simplify the PIS + demat + brokerage combination for US-resident NRIs:
| Platform | What it does | Account model |
|---|---|---|
| Vested | US-resident-focused. Buy Indian stocks + US stocks from a single app. NRI-friendly KYC. Partners with Indian AD banks for PIS. | Partnered PIS + demat behind the scenes |
| IndMoney | Broader app: India MFs + Indian stocks + US stocks. Onboarding via Indian PIS-bank partnership. | Partnered PIS + demat |
| Stockal | Global investing platform — UAE / US / Indian stocks. Less specialised for US-NRI Indian-stock route. | Partnered with broker network |
The trade-off: simpler UX + cleaner onboarding through these platforms versus higher transaction costs (typically a small flat fee + spread). Direct PIS + demat at HDFC / ICICI offers lower per-trade cost at the price of slightly heavier KYC + app friction. For US-NRIs doing > 20 trades per year, direct is usually cheaper; for occasional / small-ticket investors, the platforms win on usability.
The 10% and 24% caps
- 10% per NRI per company — an individual NRI cannot hold more than 10% of any single Indian company's paid-up equity capital under PIS.
- 10% aggregate NRI cap per company — across all NRIs combined, the cap is 10% of paid-up equity; can be raised to 24% with shareholder special resolution by the company.
- Separate from FII / FPI cap — institutional foreign investment cap operates independently of the NRI cap.
- Most listed companies have NRI utilisation well below the cap; large IT/finance names occasionally approach the cap and the RBI publishes a "ban list" of stocks where the cap is exhausted (no fresh NRI buying).
Trade execution mechanics
- NRI places order at broker (online / app).
- Broker validates PIS-Linked Bank Account mapping + RBI ban-list status of the stock.
- Order executes on NSE / BSE; trade settles T+1 (post-Jan-2023 T+1 cycle).
- Funds debit / credit at the PIS bank.
- Broker reports the trade to the PIS bank.
- PIS bank submits fortnightly Form A2 report to RBI consolidating all PIS trades.
Tax on PIS investments
| Income type | India tax rate | TDS |
|---|---|---|
| STCG on listed equity < 12 months | 20% + cess + surcharge (post 23 Jul 2024) | Yes, deducted at sale on broker side |
| LTCG on listed equity > 12 months | 12.5% on excess of ₹1.25L + cess (post 23 Jul 2024) | Yes |
| Dividend | 20% TDS reducible to 15% with TRC + Form 10F (DTAA Article 10) | Yes |
| Stamp duty on trade | 0.015% on buy / sell (NSE / BSE) | Auto-debited |
| STT | 0.1% on delivery sells, 0.025% on intraday | Auto-debited |
Practical playbook for opening NRI PIS in 2026
- Decide: Repatriable PIS (funded from NRE; sale proceeds repatriable) or Non-Repatriable PIS (funded from NRO).
- Choose Designated AD bank — HDFC / ICICI / Kotak / Federal for most working NRIs.
- Open NRE + NRO + PIS at the same bank for operational simplicity.
- Open broker demat — broker should support PIS linkage; major options: HDFC Securities, ICICI Direct, Zerodha NRI, Axis Direct.
- For US-NRIs: consider Vested or IndMoney as an alternative if UX is the primary need; direct PIS for lower per-trade cost.
- Submit FATCA / CRS declarations; W-9 for US tax residents.
- Activate trading; track 10% per-company cap if any individual position approaches it.
- For tax season: file Indian ITR-2 declaring STCG / LTCG / dividends + apply DTAA-reduced rate via Form 10F + TRC.
Frequently asked questions
Can I use my existing resident demat account after becoming NRI?
No. RBI requires the resident demat to be redesignated as an NRI account on becoming NRI. Most banks convert it to a Non-PIS demat + open a separate PIS demat for secondary-market trades. The resident-classification continuing is a FEMA violation.
Can I have PIS at one bank and demat at a different bank?
Yes — the PIS Designated AD bank is one entity; the demat broker is separate. Many NRIs hold PIS at HDFC Bank and demat at Zerodha (with PIS linkage). The broker must support the bank's PIS framework.
Can I trade derivatives (futures / options) under PIS?
No. F&O trading requires either an FPI / institutional route or a special custodian arrangement; not under PIS. Most retail NRIs cannot do F&O on Indian exchanges as easily as residents.
What is the difference between PIS Repatriable and PIS Non-Repatriable?
Repatriable funds the PIS from NRE (foreign source); proceeds remain fully repatriable. Non-Repatriable funds from NRO (India source); proceeds subject to USD 1M / FY cap. Most working NRIs use Repatriable.
Is opening PIS really mandatory just to buy 10 shares of TCS?
Yes. Any NRI secondary-market equity transaction on NSE / BSE must route through PIS — RBI mandate under FEMA Notification 20/2000. The 10-share order is technically subject to the same framework as a 10-crore order.
Can I share a PIS account with my spouse?
PIS is single-holder. Each NRI maintains their own PIS account at their chosen bank. Joint PIS is not permitted.
What happens to my PIS when I return to India and become resident?
On becoming resident, PIS is redesignated to resident demat. The holdings continue; future secondary-market trades route through standard resident demat (no PIS framework needed for residents).
Sources: FEMA Notification 20/2000; RBI Master Direction on Investment in India by NRI / PIO / OCI; SEBI broker regulations; Designated AD bank product brochures; accessed May 2026. PIS-related rules evolve; verify with the bank + RBI before opening. Editorial research, not financial advice.