NRI IPO Investment in India
NRIs are permitted to invest in Indian stock market because an NRIs is an individual resident living outside of India and is an Indian origin. Let’s read that how NRIs can invest in the Indian stock market.
Who is an NRI?
The person of Indian origin (PIO) gets classified as NRIs under Indian law who meets the following criteria.
• The person living outside of India must be an Indian Origin.
• For a fiscal year, your stay in India should be longer than 60 days but less than 182. Even if you spent 365 days or more in India in the previous 4 financial years, you will still get considered an NRI if you meet all these conditions.
• If you get assigned to a foreign country for more than 6 months, you are eligible to apply for NRI status.
Is it possible for NRIs to invest in an IPO?
• NRIs can subscribe the Initial Public Offering (IPO) if they have an NRE/NRO accounts. The Portfolio Investment Scheme (PIS) account does not cover initial public offerings (IPOs). The company is responsible for informing the RBI about how much shares it distributes to NRIs.
• For NRI's, it is recommended to read the (Red Herring Prospectus ) SEBI approve IPO prospectus document of the IPO they planning to invest for more details.
NRI's can invest in IPOs under two categories:
1. Retail Individual Bidders
NRIs can maximum bid in such a way that the number of Equity Shares so that the Bid Amount does not exceed Rs 200,000 (less Retail Discount if any).
2. Non-Institutional Bidders
NRIs can maximum bid for Equity Shares in such a way that it does not exceed the Offer size, subject to applicable limits.
• The payment from NRIs must be in Indian rupee or freely convertible foreign exchange.
• NRIs Bidders bidding on a repatriation basis should bid using blue colour Non-Resident IPO Application Forms and should authorize their SCSB (Bank which offers the facility of applying in IPO through the ASBA process) to block their Non-Resident External ('NRE') accounts or Foreign Currency Non-Resident ('FCNR') Accounts.
• NRIs Bidders bidding on a non-repatriation basis should bid using white colour Resident IPO Application Forms and should authorize their SCSB (Bank which offers the facility of applying in IPO through the ASBA process) to block their Non-Resident Ordinary (NRO) accounts for the full Bid amount, at the time of Bid cum Application Form submission.