You can get a Portfolio Investment Scheme (PIS) permission letter through any RBI-authorised bank where you hold an NRE account. PIS allows you as an NRI to buy and sell shares of listed Indian companies on a repatriation basis.
How to get PIS approval
You need to visit an RBI-authorised bank branch that provides PIS services. The bank will help you obtain PIS permission if you already hold an NRE account with them, or they will open a new NRE savings account for you.
Once you have your NRE account, the bank will:
- Open a separate PIS bank account for you
- Issue your PIS permission letter
You will use your PIS account specifically for all stock market investments, while your regular NRE account remains separate. To open an NRE account with Zerodha, you must have a PIS account with one of these banks and ensure that the PIS account is mapped with your Zerodha account:
- IDFC First Bank
- Yes Bank
- Axis Bank
- HDFC Bank
- IndusInd Bank
- ICICI Bank
For NRIs without PIS: You can open an NRO Non-PIS account to invest through Zerodha.
Why is PIS required
The Reserve Bank of India (RBI) mandates PIS to ensure foreign investment in Indian companies stays within government-set limits. These limits exist for several reasons:
- Individual investment limits: You cannot invest more than 5% in any single Indian company. This prevents any one foreign investor from gaining excessive control over Indian companies.
- Company-wise investment limits: All NRIs combined cannot exceed certain investment percentages (10%, 24%, 30%, 40%, or 49%) in any company, depending on the company and business sector. This protects Indian companies from excessive foreign ownership.
- Sector-wise investment limits: Different business sectors have varying foreign investment rules. For example, in defence companies, all foreign investors (including NRIs) cannot own more than 24% of the company together.