PIS or Portfolio Investment Scheme Bank account is a special type of account through which all transactions executed in the secondary market in NRE mode will be routed through. There are certain limits for NRI using NRE funds to invest in individual stocks and the limitation are monitored by RBI using the PIS accounts.
Whenever a NRI, trading in NRE mode, buys or sells stocks in the secondary market, these are immediately reported to their banks which in turn report them to RBI. RBI will monitor the investment limits in individual companies based on the transactions reported to them. Hence, PIS bank account is mandatory for clients trading in Repatriable mode. This is however, not needed when a client trades in NRO (Non Repatriable mode).