PINS account
Also written PINS · PIS account · Portfolio Investment NRI Scheme account · NRE PIS account · NRO PIS account
The designated bank account through which an NRI's or PIO's purchases and sales of listed Indian securities must be routed, and through which the bank reports those investments to the RBI.
In plain language
A resident investor opens a bank account, a demat account and a trading account, and starts buying shares. An NRI cannot do quite that.
RBI needs to see how much of an Indian company non-residents own, and to stop the limits being crossed. So it requires every NRI purchase and sale of listed securities to pass through one designated account, which the bank watches and reports.
That account is the PINS account — the Portfolio Investment (NRI) Scheme account. It is mandatory for NRIs and Persons of Indian Origin who want to buy and sell shares, convertible debentures or units of domestic mutual funds on a recognised Indian stock exchange.
In operation it is like an NRE account. But an existing NRE account is not enough. A separate PINS account has to be opened for trading in shares.
And only one of each is allowed: one NRE (PIS) account for money that can go back abroad, and one NRO (PIS) account for money that cannot.
How it works
Section 17.5 covers account opening for non-residents, and the PINS account is its core.
What it is for. The Portfolio Investment (NRI) Scheme (PINS) is a scheme of the Reserve Bank of India and is mandatory for NRIs and PIOs who wish to purchase and sell shares and convertible debentures of Indian companies, or units of domestic mutual funds, on a recognised stock exchange in India. All purchase and sale transactions in listed securities of NRIs are routed through their PINS account held with a designated bank, which maintains and reports to RBI, as required, the investments made by NRIs.
The account rules.
| Rule | Detail |
|---|---|
| Who may open one | Only an NRI or PIO |
| What it resembles | Identical to the NRE account |
| Existing NRE account | Not sufficient — a separate PINS account must be opened for trading in shares |
| How many | Only one at a given point of time: one NRE (PIS) account for investment on repatriation basis and one NRO (PIS) account for non-repatriation basis |
| Where | Only in designated branches of banks (authorised dealers) authorised by RBI under the Portfolio Investment Scheme |
| Which bank | An NRI may select only one authorised dealer and must route transactions through the branch it designates |
Opening it. Application for PINS permission is made through the bank on the PINS application form, with details of all shares purchased through the primary market enclosed, and the PINS demat account opening form attached. Documents: copy of current passport, valid work permit or employment visa, PIO card if applicable, and address proof, submitted at the designated branch. Seafarers employed by foreign shipping companies can open one by submitting documents such as the Continuous Discharge Certificate.
What may move through it. Permitted credits to the NRE (PIS) account: foreign inward remittance by telegraphic transfer, demand draft, cheque, traveller's cheque or foreign currency; transfers from existing NRE or FCNR accounts; dividends from shares or mutual funds; and sale proceeds of shares or mutual funds acquired on repatriation basis. Debits: outward remittance of income or dividend earned, amounts paid for purchase of securities, and charges for acquiring them. The NRO (PIS) account takes inward remittance of foreign exchange, dividends and income earned under the PIS, net sale proceeds, and transfers from other NRO, NRE or FCNR(B) accounts, with the same kinds of debits.
The limits the reporting exists to police. NRIs cannot purchase more than 5% of the paid-up capital of a company, on both repatriation and non-repatriation basis, subject to an overall limit of 10% by all NRIs. Purchase of debentures of each series shall not exceed 5% for each individual within an overall limit of 10% for all NRIs. This limit can be increased by an Indian company to 24% by passing a General Body resolution.
The demat account is separate and looser. An NRI may open a demat account with any DP, mentioning type NRI and sub-type Repatriable or Non-Repatriable. No RBI permission is required to open a demat account. Separate demat accounts are needed for repatriable and non-repatriable securities, joint demat accounts are allowed, and the first holder determines ownership for repatriation. Trading in the currency or commodity segment is not allowed using such accounts, and short selling of stocks is not allowed.
A worked example
Illustrative. Mr Varma, an NRI in Dubai, already holds an NRE savings account with Bank A in Kochi and wants to start buying Indian shares.
| Step | What happens |
|---|---|
| 1 | His existing NRE account is not enough; he applies on the PINS form at Bank A's designated branch |
| 2 | He encloses his passport, employment visa, address proof, details of shares already held from the primary market, and the PINS demat account form |
| 3 | Bank A becomes his only authorised dealer for PIS transactions |
| 4 | He opens one NRE (PIS) account for repatriable investment and one NRO (PIS) account for non-repatriable investment |
| 5 | He remits USD 60,000 by telegraphic transfer into the NRE (PIS) account |
| 6 | Every purchase and sale of listed shares is routed through that account, and Bank A reports the positions to RBI |
Now the limit that the reporting exists for. He wants to buy shares of a company with 10,00,00,000 shares of paid-up capital. His personal ceiling is 5%, which is 50,00,000 shares. All NRIs together may hold 10%, or 1,00,00,000 shares — and if the company passes a General Body resolution, that aggregate can go to 24%.
So if NRIs already hold 9.8% of the company, Bank A will not let his order through even though his own holding is nil: the aggregate cap binds before his individual cap does.
Two things he still cannot do with the demat account that came with it: trade currency or commodities, and short sell. And if he tries to open a second PINS account with Bank B for better brokerage, he cannot — only one authorised dealer, one PINS account of each type, at any point of time.
Why NISM asks about it
Chapter 17 (Operational Aspects of Investment Management), section 17.5 (Account Opening Process for Non-Residents), which covers the PINS account, the NRI demat account and the NRI trading account in sequence. Expect factual questions: is a separate PINS account needed when an NRE account exists (yes), how many PINS accounts are allowed (one of each type), and the 5%, 10% and 24% limits.
Common exam traps
- A PINS account is not the same as the Portfolio Investment Scheme. The scheme is the RBI route and its limits; the PINS account is the designated bank account through which transactions under it are routed.
- An existing NRE account will not do. A separate PINS account is compulsory for trading in shares, even though it is identical to an NRE account in operation.
- One PINS account of each type, and only one authorised dealer. Not one per broker and not one per city.
- 5% individual, 10% all NRIs, raised to 24% by a General Body resolution. The 24% needs the company's resolution, not the investor's application.
- No RBI permission is needed for the demat account, only for the PINS account. Candidates assume both.
- Repatriable and non-repatriable holdings need separate demat accounts, and the first holder decides repatriability even if a joint holder is resident in India.
- No currency or commodity trading and no short selling through these accounts.
Where this is taught
Free preparation for NISM Series X-ARelated terms
- Registered bank accountsThe bank accounts an investor links to a mutual fund folio for pay-outs — up to 5 for an individual and 10 for a non-individual — with one marked as the default for redemption proceeds.
- DepositoryAn institution that holds investors' securities in electronic form and provides the services needed to transact in them — the securities equivalent of a bank holding money rather than cash.
- Portfolio Investment SchemeThe FEMA route through which SEBI-registered FPIs, and NRIs permitted by a designated AD Category-I bank branch, buy shares, convertible debentures and warrants of listed Indian companies within set limits.
- Foreign Portfolio InvestmentInvestment by a person resident outside India in an Indian company that stays under 10% of paid-up capital — above that, the same holding counts as Foreign Direct Investment instead.
- Mode of operationHow a jointly held investment may be transacted — jointly, or on an either or survivor basis — chosen at application and recorded in the folio along with the order of holders.
- RepatriationTaking investment proceeds out of India in foreign currency — permitted without limit where the money came in as foreign currency, and capped at USD 1 million a financial year from an NRO account.