PMS stands for ‘Portfolio Management Services’. Through PMS, investors can create a professionally managed investment portfolio customised for their risk appetite, return expectations, and investment goals. They are in charge of conducting market research, designing an investment strategy, selecting securities, and monitoring the performance of the investments.
In this article, we will cover if Non-residential Indians (NRIs) can invest in PMS in India. Let’s get started.
NRI Investment in India via PMS
Can NRI invest in PMS? Yes, NRIs can invest money in the Indian market through PMS. PMS service providers create a personalised portfolio for NRI clients. However, NRIs must adhere to RBI guidelines and the provisions of the Foreign Exchange Management Act (FEMA)1999.
Here are some prerequisites to investing in PMS for NRIs.
- NRI Status: You must prove your non-resident status to be able to invest in PMS for NRIs. Submit your visa, residence permit, or employment proof.
- Minimum Investment: According to SEBI guidelines, the minimum investment requirement for investing in PMS is Rs. 50 Lakh.
- PIS Account: To avail of Portfolio Management Services for these securities, non-resident Indians should have a PIS Account. All transactions related to investing in Indian secondary markets must be routed through a PIS account.
Read: Everything You Need to Know About Portfolio Management Services in India
How Can Non-Resident Indians Invest Through PMS?
As an NRI you can invest via PMS through a Portfolio Investment Scheme (PIS) or your NRO or NRE account.
- Investing Through Portfolio Investment Scheme
Non-resident Indians need permission from the RBI to invest in NRI PMS. For that, you must open a designated bank account under the Portfolio Investment Scheme (PIS).
All transactions related to your investments in the Indian secondary investment market are to be conducted through that account. You can invest your money on a repatriation and non-repatriation basis through PIS.
A PIS bank account is a regular bank account where you deposit your money. You also need a trading account to trade in securities and a Demat account to hold the securities purchased. Under PMS, your portfolio manager would be authorised to operate these accounts on your behalf. You can visit the nearest bank branch of an authorised bank to open your PIS account.
- Investing Through Your NRO or NRE Account
You can invest in a PMS account directly through your NRO or NRE accounts if your bank provides portfolio management services.
- NRO Account: You can invest via a PMS for NRI account through your NRO account, but you cannot repatriate the funds abroad without approval from the RBI. You can invest your foreign currency funds and your funds in rupees through your NRO account.
- NRE Account: If you have an NRE account, you can repatriate your earnings abroad without restrictions. However, you must convert your foreign currency funds to Indian rupees before investing.
Documents Required for Investing Through PMS
Non-resident Indians need to submit the following documents to open an NRI PMS account to invest in Indian securities.
- A copy of your passport. You must submit copies of the pages mentioning your name, birth date, address, expiry date, photo, signature, issue date and place of issue.
- Residence Permit, Resident Visa, Work Visa, Employment Proof, or other proof of your non-resident status.
- A copy of your Indian PAN card.
- Proof of your address in India and abroad.
Things to Consider Before Investing in PMS as an NRI
Consider the following points before you decide to avail of PMS.
Types of PMS
There are three types of PMS products to meet the various requirements of investors. You must choose the right product for your requirements.
- Discretionary PMS: The portfolio manager can make all investment decisions on your behalf at their discretion.
- Non-discretionary PMS: The portfolio manager suggests your investments and buys or sells securities. But you are in charge of making the final decision.
- Advisory PMS: The portfolio manager gives investment advice, but does not perform transactions on your behalf.
Fee Structure
Service providers charge various types of fees for providing PMS services. Consider this cost before availing of PMS services.
- Entry and Exit load: An entry load of 1-3% is charged at the time of purchase. A similar exit load is levied at the time of redemption of securities.
- Management Fees: Managers charge a fixed percentage of your investment value for handling your portfolio on your behalf.
- Profit share: Some PMS schemes collect a small percentage of your investment profits along with the fixed charges.
Conclusion
The term Portfolio Management Services (PMS) refers to professional portfolio management services provided to high-net-worth individuals. Non-resident Indians can invest their money in India via NRI PMS subject to additional requirements and compliance.
To invest in PMS in India as an NRI, book a call with Moat Wealth today.
