FEMA Rules for NRIs Investing in PMS & AIF — What You Must Know Before Transferring Funds

For NRIs, compliance begins long before returns. The Foreign Exchange Management Act (FEMA) governs how money can enter and exit India through PMS or AIF routes.

Key Accounts Required
1️⃣ NRE Account: Repatriable; used for investments made from overseas income.
2️⃣ NRO Account: Non-repatriable; for local earnings or property sale proceeds.
3️⃣ PIS (Portfolio Investment Scheme): Bank-linked account mandatory for PMS equity trades.

Investment Routes

• PMS: Allowed under both NRE & NRO routes through SEBI-registered custodians.
• AIFs: Permitted under automatic route subject to RBI/SEBI guidelines; subscription money must come through normal banking channels with documentation of source.

Points to Remember
Repatriation timelines, sectoral caps, and restricted sectors (defence, real estate FAR) apply. Always match your funding source to your residency and tax intent.

Suggested Visual: Flow diagram — NRI → Bank Route → Custodian → PMS/AIF.
Key Takeaway: Regulatory clarity is half the battle; investing legally ensures peace of mind and smooth repatriation later.
Disclaimer: Educational only.