Why NRI Investing Is Complicated
India's 32 million non-resident Indians collectively represent one of the largest diaspora investment pools in the world. Remittances reached $125 billion in FY2024 — but direct investment in Indian financial markets by NRIs remains surprisingly low relative to their total wealth. Regulatory complexity is a primary reason.
NRI investment in Indian securities is governed by FEMA (Foreign Exchange Management Act), RBI's Master Direction on Investment by NRIs, and SEBI's foreign portfolio investor framework. A wealth platform that wants to serve NRI customers needs to navigate all three — and the interaction between them is not always straightforward.
NRE vs NRO: The Foundation
NRE (Non-Resident External) Accounts
Funded from foreign income. Principal and interest are fully repatriable — the investor can move money freely between India and their country of residence. This makes NRE accounts the preferred choice for NRIs who want to maintain investment optionality. Interest on NRE fixed deposits is tax-free in India (subject to DTAA with the investor's country of residence).
NRO (Non-Resident Ordinary) Accounts
Used for income earned in India — rent from property, dividends, pension, or interest on pre-existing deposits. Repatriation is permitted up to USD 1 million per financial year after tax certification (Form 15CA/15CB). Interest is taxable in India at applicable rates with TDS deducted at source.
"The NRE/NRO distinction is the most common source of compliance error for platforms new to NRI services. Getting it right at onboarding saves significant regulatory overhead downstream."
Mutual Fund Investment by NRIs
NRIs can invest in Indian mutual funds subject to the following:
- Investment must be through NRE or NRO account — cash investments are not permitted
- Certain fund categories (specifically US-person restricted funds) have geo-blocking requirements — US and Canada residents face additional restrictions due to FATCA compliance burdens on AMCs
- KYC for NRIs requires additional documentation: passport copy, visa, proof of overseas address, and in-person or video-based KYC verification
- SIP mandates must be linked to NRE/NRO accounts with NACH or standing instruction setup through the originating bank
Direct Equity via Portfolio Investment Scheme (PIS)
NRI investment in listed Indian equities requires a Portfolio Investment Scheme (PIS) account — a designated account with a PIS-authorised bank, registered with RBI. Only one PIS account is permitted per NRI. Trades are executed through a SEBI-registered broker with the PIS account as the funding source.
The purchase ceiling for NRI equity investment in a single company is 5% of paid-up capital (10% with company board permission). These limits are aggregate across all NRI investors and are monitored by depositories.
Platform Compliance Checklist
- NRI-specific KYC documentation workflow (passport, visa, overseas address proof, video KYC)
- NRE/NRO account type capture and validation at onboarding
- US/Canada person identification and fund restriction logic
- FATCA/CRS declaration capture
- PIS account linkage and verification for equity investors
- TDS deduction and Form 16A issuance for NRO redemptions
- 15CA/15CB certification workflow for remittances above threshold
- Repatriation documentation and audit trail
AmaraWealth's NRI Infrastructure
AmaraWealth's NRI investing module includes compliant onboarding flows with geo-aware fund restrictions, PIS account linkage, integrated FATCA/CRS declarations, and automated TDS computation on NRO redemptions. Bank partners deploying the platform inherit a compliance infrastructure that would take 12–18 months to build independently.