How NRE PIS Clients Should Maintain Funds for Mutual Funds, ETFs & IPOs
How should NRE PIS clients maintain funds for Mutual Fund, ETF, and IPO transactions?
Who is this applicable to?
This FAQ applies to NRI clients holding an NRE Savings Account with a PIS-enabled trading account who invest in Mutual Funds, eligible ETFs, or apply for IPOs.
How are Mutual Fund, ETF, and IPO transactions settled?
Unlike equity trades executed under the PIS framework, Mutual Fund purchases, eligible ETF investments, and IPO applications are not settled through the PIS account.
The required funds are blocked/debited from your linked NRE Savings Account.
Therefore, you must ensure that sufficient funds are available in your NRE Savings Account before placing the order or submitting an IPO application.
Why is the PIS account not used?
The PIS account is used only for reporting and settlement of eligible secondary market equity transactions under the RBI Portfolio Investment Scheme.
Mutual Funds, eligible ETFs, and IPO applications are processed through the linked NRE Savings Account and not through the PIS settlement mechanism.
What happens if sufficient funds are not available?
If your linked NRE Savings Account does not have sufficient funds:
- Mutual Fund or ETF purchase transactions may fail during settlement.
- IPO applications may not be processed successfully due to insufficient funds.
Key Points
Transaction | Settlement/Fund Source |
|---|---|
Equity Buy/Sell (PIS) | PIS Account |
Mutual Fund Purchase | NRE Savings Account |
Eligible ETF Purchase | NRE Savings Account |
IPO Application | NRE Savings Account (funds blocked/debited) |
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