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Under FEMA, PIS is RBI's Portfolio Investment Scheme that allows NRIs to invest in Indian equities (stocks, derivatives) on a fully repatriable basis through a dedicated NRE PIS account linked to trading/ demat accounts.
PIS permission is only mandatory for reptariable (NRE-based) stock investment. Considering this, for non-repatriable, i.e., NRO trading, you can use a regular NRO demat account.
An NRE PIS account allows you to repatriate funds fully, with reporting of every trade to the RBI. On the other hand, NRO-PIS is non-repatriable with up to USD 1 million per financial year, simpler with no requirement of RBI reporting.
Yes, NRIs can trade without a PIS letter via an NRO non-PIS account. However, if you want to remit your investment amount and gains overseas from NRE funds, you need a PIS letter.
RBI-authorized banks like SBI, HDFC, IDFC, ICICI First, Kotak, and Axis Banks issue a PIS permission letter. However, first you need to have an NRE account with any of these banks.