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Table of Contents
Non-Resident Indians (NRIs) participate in Indian securities through specific regulatory and banking frameworks. One area of interest is public issue participation, where investors apply for shares offered during an Initial Public Offering (IPO). Questions such as can NRI buy IPO, can NRI invest in IPO, and can NRI buy IPO in India are addressed through rules issued by Indian regulators and authorised banking systems. This article explains how NRI IPO investment works, the permitted routes, and how IPOs for NRIs are structured under Indian regulations.
The NRI IPO application process follows exchange-mandated and bank-regulated workflows used for all public issues, with additional checks for foreign exchange compliance.
NRIs applying for an IPO for NRI investors use demat and trading accounts registered in NRI mode with brokers authorised to handle overseas resident clients. These accounts are linked to designated NRE or NRO bank accounts.
All IPOs use the Application Supported by Blocked Amount (ASBA) system. Under ASBA, the application amount is blocked in the NRI’s linked bank account and is released or debited based on allotment outcomes.
IPO bids under the NRI IPO category are submitted through broker platforms or bank-linked ASBA interfaces, using the applicant’s demat and bank details.
Once the IPO closes, shares are allotted according to exchange-defined rules and credited to the demat account. Trading begins once the shares are listed.
This process applies to all IPO for NRI applications under both PIS and Non-PIS routes.
An Initial Public Offering (IPO) is the process through which a company offers its shares to the public for the first time. NRI IPO investment allows eligible non-resident investors to participate in these issues within the framework defined by Indian securities and foreign exchange laws.
NRIs are individuals of Indian origin or citizenship who reside outside India. Their participation in IPOs is governed by regulations issued by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), along with applicable tax laws.
Participation by Non-Resident Indians (NRIs) in IPOs is governed by a set of regulatory and account-level conditions defined under SEBI and RBI frameworks. These conditions relate to identity verification, account structures, and the permitted investment routes.
A valid Permanent Account Number (PAN) is required.
Passport and overseas address proof are used for identity and residence verification.
OCI or PIO cards, where applicable, are recognised as supporting documents under current KYC norms.
A demat account in NRI status is used for holding securities.
A trading account enabled for NRI transactions is used for placing IPO bids through recognised platforms.
An NRE or NRO bank account is used for fund blocking, refunds, and corporate action credits.
FCNR accounts may be linked for repatriation-related banking but are not used directly for equity settlements.
IPO applications by NRIs are permitted under both the PIS and Non-PIS routes, depending on whether the investment is intended to be repatriable or non-repatriable.
The PIS route is generally associated with secondary-market equity trading and operates under separate RBI reporting norms.
NRIs may apply as individuals or through eligible non-individual entities (such as companies or trusts), where permitted under RBI and SEBI regulations.
These criteria define how NRI participation in IPOs is structured within India’s regulatory and depository systems.
Indian regulations provide two distinct routes through which NRIs may participate in IPO transactions:
Under the RBI’s PIS framework, NRIs may participate in IPOs and secondary-market equity trading. The demat and bank accounts are designated as PIS accounts, and transactions are reported by authorised dealer banks to the RBI.
Under the Non-PIS route, NRIs may apply for IPOs and hold shares in demat form, but shares held under the Non-PIS route are treated as non-repatriable, although they may be sold on Indian stock exchanges. These holdings are typically held on a non-repatriable basis unless otherwise permitted.
The route selected determines how IPO shares may be held and traded after allotment.
Income from NRI IPO investment is subject to Indian tax laws.
Capital gains
Gains from the sale of IPO shares are taxed as capital gains based on the holding period and whether the shares are classified as equity.
Dividend income
Dividends are taxable in the hands of the investor as per the applicable income tax slab and withholding provisions. Companies no longer pay Dividend Distribution Tax.
Repatriation
Repatriation of IPO proceeds depends on whether the investment was made through an NRE or NRO account and is governed by FEMA and RBI guidelines.
IPO for NRI participation operates under three regulatory layers:
SEBI Regulations: SEBI sets the framework for IPO disclosures, allotment rules, and investor classification.
RBI’s Foreign Exchange Management Act (FEMA): RBI regulates how NRIs invest in Indian securities under the Portfolio Investment Scheme and Non-PIS routes.
Income-tax Laws: Capital gains and dividend income from IPO shares are taxed under Indian tax legislation applicable to NRIs.
Can NRI buy IPO in India is determined by compliance with SEBI, RBI, and banking rules. When the prescribed account structures, application routes, and regulatory conditions are met, NRIs may participate in Indian IPOs under the defined NRI IPO framework. These rules govern how applications are submitted, how funds are handled, and how shares are held after allotment.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Yes. Can NRI apply for IPO is governed by SEBI and RBI regulations, which permit participation through designated NRI accounts and investment routes.
NRIs typically need a PAN, passport, overseas address proof, KYC documents, and details of their NRI demat, trading, and bank accounts.
Under ASBA, the IPO application amount is blocked in the NRI’s linked bank account and is debited only if shares are allotted.
Yes. Repatriation of IPO proceeds is permitted subject to RBI and FEMA regulations and the use of designated NRE or NRO banking channels.
Gains from IPO shares are subject to capital gains tax in India based on the holding period, and dividends are taxed as per the applicable income tax provisions.
Yes. NRIs may apply for SME IPOs, subject to the eligibility conditions and regulatory requirements specified by the exchange and the issuer.
A PIS account is required when IPO shares are intended to be traded in the secondary market. Under the Non-PIS route, IPO participation is permitted with restrictions on trading.
Applications exceeding ₹2 lakh fall under the Non-Institutional Investor (HNI) category, as defined by SEBI.
Applicants without a valid PAN, demat account, or who do not meet regulatory or issuer-specific eligibility criteria are not permitted to apply.
Applications above ₹10 lakh are commonly referred to as Big HNI, a sub-classification within the non-institutional category.
Yes. Shares allotted to HNI applicants can be sold once they are credited to the demat account and trading begins, subject to exchange rules and any applicable lock-in conditions.
Bids are placed within the price band announced by the issuer, including the cut-off price where permitted.
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