PIS accounts
NRE-PIS (portfolio investment scheme) and non-PIS accounts are mandatory for NRIs who wish to invest in Indian markets, as per regulatory guidelines.
A PIS account linked to an NRE account is ideal for NRIs prioritizing the repatriation of funds. However, they require approval from both the bank and the Reserve Bank of India (RBI), often taking up to two weeks or more to activate. PIS accounts also incur higher compliance costs and are subject to RBI limits on foreign/NRI holdings in companies—restricting investments if a stock hits its cap. Trading in futures and options is also restricted.
In contrast, non-PIS accounts linked to NRO accounts are easier to open (no RBI approval needed) and offer greater flexibility. However, they come with limited repatriation options. NRIs can transfer up to $1 million annually from NRO to NRE accounts, subject to documentation such as a signed request, FEMA declaration, source of funds proof, Form 15CB (from a CA), and Form 15CA (via the tax portal).
Abhishek Amarani, a Dubai-based professional, said, “It took me one year to get my NRE-PIS account in place. After receiving login credentials, they didn’t work for a couple of months. Finally, I had to email the chairman and board of directors to get this resolved.”
Vishal Dhawan, a Sebi-registered investment advisor and founder and CEO of Plan Ahead Wealth Advisors, suggests that “when it comes to account opening, it is strongly recommended that NRIs open all their accounts (bank, demat, and trading) while physically present in India. This approach helps capture any missing signatures or documents instantly and significantly reduces processing delays that often plague remote account setup.”
Also Read: How NRIs can invest in Indian mutual funds
Mutual fund KYC issues
KYC (know your customer) compliance is another challenge for NRIs, particularly when tied to mutual fund investments.
Aastha Verma, a Dubai-based working professional, faced significant issues while trying to withdraw her mutual fund investments. “I was required to scan my face for a KYC update, which seemed simple enough,” she says. “But because I was in Dubai, the location restrictions blocked me from completing the process.”
According to Dhawan, many NRIs discover that location-based restrictions prevent them from completing digital verification, essentially locking them out of their own investments until they can visit India in person. “These challenges make managing investments from abroad complicated,” Verma says.
Dhawan said for PANs marked as NRI, mobile validation is not mandatory and email validation suffices for transaction processing.
Anuj Kumar, CEO of myCAMS, said “The last date for the NRI KYC has been extended till 30 April. Currently, NRIs are exempted from needing a KYC validated status for interoperability (KYC-validate status).”
Kumar noted that there is still no formal mechanism for upgrading a KYC status from ‘registered’ to ‘validated’ online. “The lack of any clear guidelines makes us believe the last date might get extended, though that remains speculative. Capital market participants have shared a set of recommendations with the regulator, and we expect some of those to be reflected in the upcoming circular on NRI KYC, which should be released in the near future,” he said.
He highlighted two major challenges that NRIs face when trying to complete eKYC online. “Firstly, regulations require a document for Proof of Identity (POI) and Proof of Address (POA) that can be validated with the source. Today, only Aadhaar provides APIs (application programming interface) that allow such validation. Other critical sources like passport authorities—especially relevant for NRIs—have not yet made such APIs available,” he said.
“Secondly, the circular governing online eKYC mandates geotagging within India for the process to be valid. This effectively eliminates the possibility of NRIs completing eKYC remotely from outside the country,” he added.
Also Read: How tourists and NRIs can use UPI without an Indian bank account to make payments
UPI limitations and mobile number issues
UPI, a convenient payment option for residents, presents a challenge for NRIs, especially when linked to mobile numbers that are inactive or based outside India. Although UPI now supports some international numbers, several major banks still require Indian numbers for authentication. NRIs often have to keep their Indian numbers active to receive OTPs (one-time passwords).
Dhawan suggests that NRIs should maintain a local Indian mobile number for OTPs, standardize residency status to non-resident across institutions, limit the number of accounts to reduce complexity, and most importantly, consult tax and financial advisors who are well-versed in FEMA and income tax regulations.
Also Read: RBI allows NRIs to open rupee accounts abroad with authorized banks
Documentation for joint accounts
Document requirements can also pose some difficulties, particularly for joint accounts or spousal applications. Khushbu Nehita, Amarani’s wife and an NRI in Dubai, couldn’t open an NRE-PIS account because the utility bills and tenancy agreements were all in her husband’s name.
Dhawan of Plan Ahead Wealth Advisors said a marriage certificate, when combined with other ID and address proof, should suffice. “However, many institutions still demand documents in each spouse’s individual name — a requirement that is especially challenging in cases where married couples often share household bills and rental agreements,” he said.
Insurance-related challenges
In the insurance space, NRIs applying for term policies may be asked to submit credit reports from their country of residence, particularly for higher-value covers. While this is part of the underwriting process to ensure robust due diligence, it can be challenging to obtain such reports, depending on local credit bureau protocols.
An HDFC Life spokesperson told Mint that such requirements are part of their underwriting process, especially for high-value insurance policies, to ensure smooth claims later.
Takeaway
Proactive planning—such as completing key setups during India visits, keeping an active Indian mobile number, and consulting financial advisors familiar with NRI regulations—can make the process of managing finances in India smoother and more efficient for NRIs.
