Bonanza Portfolio Ltd

Who is a PIO?

A citizen of a foreign country (other than a citizen of Bangladesh or Pakistan) is a PIO if:

He/She at any time held an Indian Passport. OR
He/She or either of his parents or any of his/her grandparents was a citizen of India; OR
He/She is a Spouse (not being a citizen of Bangladesh or Pakistan) of an Indian citizen (a) or (b) above.

Why Invest in India?

India embarked on a series of economic reforms since 1991 in reaction to a severe foreign exchange crisis, those reforms have included liberalized foreign investment and exchange regimes, significant reductions in tariffs and other trade barriers, reform and modernization of the financial sector, and significant adjustments in government monetary and fiscal policies placing India to the world's as 12th largest economy in US dollar terms in 2005.

The Indian capital markets have witnessed a transformation over the last decade. India is now placed among the mature markets of the world. Key progressive initiatives in recent years include:

The depository and share dematerialization systems that have enhanced the efficiency of the transaction cycle.
Indian capital markets have rewarded Foreign Institutional Investors (FIIs) with attractive valuations and increasing returns.
Many new instruments have been introduced in the markets, including index futures, index options, derivatives options and futures in select stocks.
Growth in 2006-2007 of GDP is expected to be above 7%.
Foreign portfolio and direct investment flows have risen significantly since reforms began in 1991.

What are the products offered to NRI / PIO by Bonanza?

NRI can invest in the following products.
Investments in equities under PIS on BSE and NSE
Derivatives trading on the NSE
IPO
Portfolio Management Services
Investments in Mutual Funds
Trading in International commodities

What steps an NRI needs to take to start investing in the Indian Stock Market?

An NRI should have a bank account (NRE/NRO or both) with designated bank, which is approved by RBI (Reserve Bank of India) for this purpose.

He should apply for a general approval for investment in Indian Stock Market through his designated bank branch.

He should open a Demat Account with Bonanza Portfolio Ltd to hold his shares and register with Bonanza Portfolio Ltd to execute his buy/sell orders on the stock exchange(s).

What type of saving bank account(s) can be opened by an NRI or PIO in India?

Any NRI/PIO can open two types of savings accounts with any bank in India. They are NRE and NRO bank accounts.

What is a NRE account?

A NRE bank account is an external saving bank account opened for Non resident Indians. This is why it is known as Non-Resident External account. Since it is an external account, any monies lying in NRE account can be taken outside the country or in other words, the monies lying in NRE account are fully repatriable. This money can be converted into any foreign currency at the behest of the account holder and can be remitted outside the country.

What is a NRO account?

A NRO bank account is an ordinary saving bank account opened for Non resident Indians. This is why it is known as Non-Resident Ordinary account. Since it is an ordinary account i.e. as good as a normal saving bank account, monies lying in NRO account cannot be taken outside the country or in other words, the monies lying in NRO account are not repatriable.

What is the status of NRO/NRE accounts on the return of the account holder to India?

RBI has advised banks to re-designate such accounts as resident accounts on return of the account holder to India.

In case a resident Indian becomes a non-resident, will he/she be required to change the status of his/her holding from Resident to Non-Resident?

As per section 6(5) of FEMA, NRI can continue to hold the securities, which he/she had purchased as a resident Indian, even after he/she has become a non-resident Indian, but has to transfer the shares to his NRO (Non Resident Ordinary) account.

Can NRIs invest in shares, debentures and units of Mutual Funds in India?

NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.

NRIs subscribe to IPO? What are the permissions/approvals required?

Yes. NRI can subscribe to IPO without any permission. The issuing company is required to take specific or general permission from GOI/RBI.

What is PIS?

Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) defined in Schedule 3 of Foreign Exchange Management Act 2000 under which the �Non Resident Indians (NRIs)� and �Person of Indian Origin (PIOs)� can purchase and sell shares and convertible debentures of Indian Companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.

PIS account is applicable only for NRIs and not for resident Indians.
It is only for trading in Indian markets and not any other foreign markets.
It is applicable only for equity trades and not MF investments.

How Many PIS accounts an NRI /PIO can have?

Any NRI or a PIO wanting to trade/make fresh investments in the Indian Equity Secondary Market needs and must have one PIS account with only one designated bank in India

What are the types of PIS account?

There are two types of PIS account:
NRE PIS account
NRO PIS account
Why is PIS required?

For all the Indian companies or companies listed on Indian stock exchanges, there are certain limits which have to be monitored under FEMA regulations. For any company the foreign investment into that company cannot cross certain limit. This limit is different from company to company and sector to sector. Also individually any NRI or a PIO cannot invest more than 5% in any Indian company.

How many PIS account can a NRI open?

NRI/PIO can open only one PIS account with any designated banks in a prescribed format for PIS account, upon which the bank can issue a PIS approval letter to the investor.

Can NRI invest in all products through PIS account?

No. Any investment done in secondary market should be routed through a PIS account. For other products the investment can be done through direct subscription route.

What is a NON PIS Account?

It is a normal savings bank account, which can be opened with any bank in India. Non-PIS is an account for which the transactions are not reported to RBI. This account takes care of selling all those shares, which are not allowed under PIS. Shares acquired under IPO or received as gift or bought as resident Indian can be sold under Non-PIS account.

What type of transactions is allowed under NON PIS account?

Sale of shares, which were, acquired other than PIS.
Shares acquired through IPO�s
Gifts from relatives or otherwise
Shares bought as resident Indian
Fresh acquisition through IPO�s.
Investment in Mutual Funds

What is meant by investment through direct subscription route?

As per the regulations NRIs are allowed to invest up to a certain percentage of the total paid up capital of the company by directly subscribing to the equity/convertible debentures of the company either though a public offering made by the company or through private placements on one to one basis. Regulations provide for different ceilings on such investments based on the industry to which the company belongs and also the nature of investments (repatriation / non-repatriation basis).

Do investments made through IPO�s or Private placements come under PIS?

No, investments made by NRIs though subscription to Initial Public Offerings (IPO�s) or private placements are not covered by Portfolio Investment Scheme. Such investments are covered by RBI's regulations with regard to Foreign Direct Investments.

Do NRIs need approvals from RBI for selling securities acquired through IPO�s/Private Placement?

No. NRIs can sell such shares/debentures on the Exchange without any approval. However, while seeking the credit of sale proceeds to NRE/NRO account, the bank should be provided with the details regarding date of allotment and cost of acquisition to calculate the taxes, if any.

Can an NRI have investments under PIS on repatriation and non-repatriation basis?

Yes. Investment can be made on repatriation as well as non-repatriation basis. However, an NRI will have to open NRE account as well as NRO account with designated bank branch as the sale proceeds of non-repatriation investment can only be credited to NRO account.

Under what circumstances can investments made under PIS are repatriated?

The repatriation of the sale proceeds, net of taxes, are allowed if the original purchase was made on repatriation basis and such investments were made out of funds from NRE/FCNR account or by means of remittance from abroad.

What are the provisions for corporate benefits for investment on repatriation and non-repatriation basis?

Corporate benefits may be in the form of dividend, interest, rights, bonus, etc. Any corporate benefit resulting out of investment in securities on non-repatriation basis will not carry the right of repatriation. Similarly any corporate benefit resulting out of investment in securities on repatriation basis will carry the right of repatriation. This is subject to change depending on prevailing RBI regulations.

Can investments made under different schemes be held under a single demat a/c?

No. Securities received against investments under �Foreign Direct Investment scheme (FDI)�, �Portfolio Investment scheme (PIS)� and �Scheme for Investment� on non � repatriation basis have to be credited into separate demat accounts. Investment under PIS could be on repatriation or non � repatriation basis. Investment under FDI scheme is on repatriation.

What is the procedure of Dematerialization?

Client submits a DRF form along with the physical share certificate to Bonanza Portfolio Ltd, who in turn forwards it to the Registrar & Transfer agent for confirmation from the company. After the confirmation is received the depositories credits the client a/c with the same no. of shares.