NRI IPO Investment in India

Published on Sunday, July 10, 2016 by Chittorgarh.com Team | Modified on Sunday, August 9, 2020

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NRI IPO Investment in India

An NRI is an individual resident outside India who is a citizen of India or is an 'Overseas Citizen of India' cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.

Can NRI apply for IPO Shares?

Yes, Eligible NRI's can invest in Initial Public Offers in India.

Note: Banks like ICICI Bank doesn't offer Online IPO and Mutual Funds Investment for NRI customers other than the Middle East customers. If the NRI customer is in India, he can apply in IPO or buy Mutual funds with the help from the bank branches. As per ICICI Bank, this limitation is because of regulatory requirement where products which are sold through a fund manager cannot be offered to the NRI customers residing in the US, UK or Canada.

For NRI's, it is recommended to read the Red Herring Prospectus of the IPO they planning to invest for more detail.

Most IPO Red Herring Prospectus in India has a section like below.

Eligible NRI(s): NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or invitation under the Offer and in relation to whom the Bid cum Application Form and this Red Herring Prospectus will constitute an invitation to purchase the Equity Shares.

Eligible NRI's can invest in IPO's under two categories:

  1. Retail Individual Bidders

    NRIs can maximum bid in such a number of Equity Shares so that the Bid Amount does not exceed ₹200,000 (less Retail Discount if any).

  2. Non-Institutional Bidders

    NRIs can maximum bid for Equity Shares not exceeding the Offer size, subject to applicable limits.

Note:

  • The payment from NRIs will be accepted only in Indian rupee or freely convertible foreign exchange.
  • For NRIs, a Bid Amount of up to ₹200,000 may be considered under the Retail Category for the purposes of allocation and a Bid Amount exceeding ₹200,000 may be considered under the Non-Institutional Category for the purposes of allocation.
  • Eligible NRI Bidders bidding on a repatriation basis should bid using blue colour Non-Resident IPO Application Forms and should authorize their SCSB to block their Non-Resident External ('NRE') accounts or Foreign Currency Non-Resident ('FCNR') Accounts.
  • Eligible NRI Bidders bidding on a non-repatriation basis should bid using white color Resident IPO Application Forms and should authorize their SCSB to block their Non-Resident Ordinary (NRO) accounts for the full Bid Amount, at the time of the submission of the Bid cum Application Form.

For more information, visit:

 

ProStocks Non-PIS NRO Trading

 



Frequently Asked Questions

  1. 1. Does NRI need the permission of RBI to apply in an IPO?

    No, NRIs do not require any permission to invest through IPO.

     

  2. 2. Do NRIs need RBI approval for selling stocks allotted through IPO?

    No. An NRI can sell IPO shares without any approval.

    Note that, 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.

     

  3. 3. Can NRI apply IPO online?

    Yes, NRI's can apply IPO online if the broker with whom they have an account offers an Online IPO facility.

    Besides, NRIs are made not-eligible to participate in most IPOs by the issuer company due to extended compliance costs. An NRI should check the IPO Red Herring Document (RHP) for eligibility.

     

  4. 4. Can I apply in IPO Online through my ICICI Bank NRI 3-in-1 account?

    If you are resident of US, UK or Canada, you cannot apply in IPO's online. If you are visiting India for vacation, you could apply in IPO by visiting the bank branch.

     

  5. 5. Can NRI buy IPO in India?

    Yes. By law, NRI can invest in Indian IPO of Equity Shares, NCD and Bonds. NRI IPO and Mutual Fund investment are permitted through the Non-PIS Account only (NRE or NRO Saving Bank Account without PIS permission).

    It is left to the issuer company to allow NRIs to invest in an IPO. In almost all case, companies going public do not make NRIs eligible to invest in IPO. This is because allowing NRIs to invest in the IPO has additional compliance requirement by RBI. The issuer company is responsible to inform RBI about the shares allocated to NRI's.

    NRIs do not need any special approvals from RBI to buy or sell IPO shares. The IPO investment-related bank transactions are done through Non-PIS saving bank account. They are not reported to RBI.

    Investing in IPO in India is online and easy if you have an NRI 3-in-1 account with a bank.

    If you have your demat account with a broker who doesn't offer 3-in-1 account (i.e. Zerodha, Sharekhan, 5Paisa, ProStocks), you can still apply in IPO using the net banking facility of the bank where you have your Non-PIS Saving Bank Account.

    Note:

    • The Red Herring Prospectus of the issuer company provides the detail of NRI eligibility to invest in IPO.
    • Few banks like ICICI do not offer online IPO to NRI customers.

     

  6. 6. Is pan number required for NRI to purchase public issue shares?

    Yes PAN Card (Permanent Account Number) is mandatory for NRI to invest in the stock market in India and to invest in IPO's.

    PAN is mandatory to open an NRI Demat Account with the stockbroker. The Demat account is required to invest in IPO or transact in shares in India.

     

  7. 7. How to apply in IPO from NRI account (NRE or NRO)?

    An NRI customer who is eligible to invest in an IPO can apply online through the net-banking facility of the bank where they have a Non-PIS Saving Bank NRI Account.

    Most banks including ICICI, HDFC, Kotak, SBI and Axis bank offer online IPO application (ASBA).

    As most companies do not make NRI's eligible to invest in IPO of Equity Shares, NRI customers should check the IPO Red Herring Prospectus (RHP) to check the eligibility.

     

  8. 8. Can an NRI purchase securities by subscribing to the public issue (IPO)?

    An NRI is permitted to subscribe to the public issue provided the company offering the issue allows NRI to participate in its issue. They detail related to this is published in the Red Herring Document (RHP) of the IPO.

    Note that most companies do not permit NRIs to invest in their IPO due to additional compliance costs.

    NRIs can also only apply in an IPO through the ASBA facility provided by the bank where they have their NRI bank account. NRI's can't apply in IPO through an online broker like Zerodha as they use UPI as a payment gateway which is not available to NRIs.

    An NRI does not require any PIS approval to apply for a public issue and can invest using Non-PIS NRE or NRO bank, Trading and Demat accounts depending on whether an NRI wants to invest on a repatriation basis or a non-repatriation basis.

     

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2 Comments

Shri
2. Shri  Dec 4, 2018 15:38 I Like It. | Report Abuse Reply
Thanks for the article. But this NRI refers to only people from Gulf countries. ICICI Bank told me these are not applicable for UK NRIs.
I cannot distinguish between Gulf NRI and UK, EU/US NRI.
Is there any clarification?
Is there any other bank which allows NRI to buy IPO Equity shares?

Thanks, Shri
deliteink
1. deliteink  Jul 26, 2016 15:18 I Like It. | Report Abuse Reply
great article. really informative.









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