Can I invest in Indian startups as an NRI?

Yes, under the FDI route with government approval for most sectors. Automatic route available for many sectors up to prescribed limits.

What happens to my investments if I return to India permanently?

You must convert NRE accounts to resident accounts within a reasonable time. Existing investments can typically continue.

Can I use UPI for investment transactions?

UPI is now available for NRIs but with limitations. Not all investment transactions support UPI yet.

Are there different rules for US-based NRIs?

India-USA DTAA provides specific benefits , but basic RBI investment rules remain the same. FATCA compliance may be required.

Can I invest in real estate through these rules?

Direct real estate investment is prohibited, but you can invest in REITs and real estate mutual funds. Property purchase has separate regulations .

RBI Rules for NRI Investments

Raj, an NRI software engineer in Dubai, thought he could invest in any Indian company through his regular savings account.

His first stock purchase was rejected by his broker with a confusing message about "PIS accounts" and "RBI compliance."

Sound familiar? Every month, thousands of NRIs face investment roadblocks because they don't understand RBI's rules. The confusion is real, but the rules aren't as complex as they seem.

By the end of this guide, you'll know exactly what you can invest in, how much you can repatriate, and what documentation you need. No more rejected transactions or compliance headaches.

The Common Myths About RBI Investment Rules

Myth 1: "I can invest in Indian stocks using my regular NRE account"
Reality: You need a separate Portfolio Investment Scheme (PIS) account for stock market investments.

Myth 2: "There are no limits on how much I can invest"
Reality: Individual NRIs can invest up to 5% of a company's paid-up capital, with aggregate NRI investment capped at 10%.

Myth 3: "All my investment proceeds can be repatriated freely"
Reality: Repatriation depends on your account type and investment source.

Let's break down what RBI actually says and why these rules exist.

What the Rules Actually Say

RBI's investment framework for NRIs serves two purposes: protecting India's economy while giving you genuine investment opportunities. The rules are updated regularly, with significant changes in 2025 that actually favor NRIs.

Investment Categories You Can Choose From

Equity Investments (Through PIS)

Listed company shares on recognized stock exchanges
Convertible debentures
Maximum 5% of any company's paid-up capital per NRI
Total NRI investment cannot exceed 10% (can be raised to 24% with company approval)

Fixed Income Options

NRE and NRO fixed deposits
Government securities and treasury bills
PSU bonds and infrastructure bonds
Corporate bonds and NCDs

Mutual Fund Investments

All domestic mutual funds (both repatriable and non-repatriable basis)
Investment through NRE accounts for repatriable funds
No upper limit on investment amount

Alternative Investments

GIFT City investments for tax benefits
National Pension System (NPS Tier I only)
Infrastructure Debt Fund bonds

👉 Tip: Diversify across categories. Don't put all your money in one investment type, no matter how attractive the returns seem.

How RBI Rules Really Work for NRIs

The Portfolio Investment Scheme (PIS) Explained

Think of PIS as your gateway to Indian stock markets. You cannot buy or sell Indian stocks without it.

What You Need:

A designated NRE or NRO account specifically for PIS
Permission letter from an authorized dealer bank
Demat account linked to your PIS account

Recent 2025 Simplification: You no longer need separate NRE and NRO PIS accounts. One NRE PIS account handles both repatriable and non-repatriable investments.

Investment Process:

Open PIS account with designated bank branch
Link demat account
Place orders through registered broker
All transactions routed through PIS account only

Repatriation Rules Made Simple

NRE Account Investments: Unlimited repatriation
NRO Account Investments: Up to $1 million per financial year
FCNR Deposits: Unlimited repatriation

Property Sale Proceeds: Up to $2 million annually without RBI approval (increased from previous limits)

The key is source of funds. Money brought from abroad gets full repatriation rights. Indian income has limits.

👉 Tip: Keep detailed records of fund sources. This documentation becomes crucial during repatriation.

Benefits for NRIs Under Current Rules

Tax Efficiency Opportunities

2025 Updates That Help You:

TCS threshold increased from ₹7 lakh to ₹10 lakh under LRS
No TCS on education loan remittances
Property repatriation limit doubled to $2 million

Available Tax Benefits:

Investment Flexibility

What's Allowed:

Futures and Options trading (NRO account only, non-repatriable)
Rights and bonus shares without additional approvals
IPO investments with proper documentation

New Opportunities:

GIFT City funds for tax-free USD deposits
Enhanced mutual fund access
Simplified account management

Risks and Limitations You Must Consider

Prohibited Sectors

RBI completely restricts NRI investments in:

Agricultural and plantation activities
Real estate business (except construction projects)
Lottery and gambling businesses
Chit funds and Nidhi companies
Trading in Transferable Development Rights

Investment Restrictions

Individual Limits:

5% maximum in any single company's equity
Cannot exceed sectoral FDI caps
No margin trading or speculative activities

Documentation Requirements:

Regular KYC updates mandatory
Source of funds verification
Tax compliance certificates for large repatriations

Compliance Penalties: Account freezing for non-compliance. RBI audits are rare but comprehensive when they happen.

👉 Tip: Set calendar reminders for KYC renewals. Most banks now accept digital KYC updates, making the process much easier.

Step-by-Step Application Process

Opening Your Investment Accounts

Step 1: Choose Your Bank

Select banks with strong NRI services
Ensure they offer PIS accounts
Check their international banking hours

Step 2: Documentation

Valid passport and visa
Overseas address proof
Income proof from employer/business
Initial funding source documentation

Step 3: Account Setup

Open NRE account first
Apply for PIS permission simultaneously
Link demat account within 30 days

Step 4: Funding Your Investments

Transfer funds through normal banking channels
Maintain proper FIRC documentation
Ensure compliance with LRS limits if applicable

Investment Execution

For Stock Market Investments:

Ensure PIS account has sufficient balance
Place orders only through registered brokers
All settlements through PIS account only
Monitor investment limits continuously

For Fixed Deposits and Bonds:

Choose between repatriable/non-repatriable basis
Compare rates across banks
Understand tax implications upfront
Plan maturity dates for optimal repatriation

What This Means for Your Investment Strategy

RBI's 2025 updates make NRI investing easier, not harder. The simplified PIS account management, higher TCS thresholds, and increased repatriation limits all work in your favor.

Your immediate action plan:

Assess your current account structure - do you have the right accounts?
Review your investment limits - are you maximizing opportunities?
Plan your repatriation strategy - optimize for tax efficiency
Consider new opportunities like GIFT City investments

The key is starting with proper account setup and understanding the rules upfront. Don't let compliance fears stop you from building wealth in India's growing economy.

Ready to start investing in India with full RBI compliance? Join our WhatsApp community to get expert guidance and connect with fellow NRI investors.

Download the Belong app to explore tax-free USD fixed deposits and other investment opportunities designed specifically for NRIs.

Sources:

RBI Rules for NRI Investments You Must Know