Why NRIs Should Consider Investing in India – Benefits & Insights

Why would NRIs want to open demat accounts in India? There are many reasons for this. One is that many NRIs may want to return India eventually. They will want to invest in stocks, so that they will have a nice nest egg for their retirement, or use it for other goals like their children’s wedding, higher education or to build a home in India. Another reason is that the Indian stock markets offer much higher returns than in developed countries, so it makes sense to invest here.

What NRIs need to buy and sell stocks?

If you are an NRI, there are several things to consider while investing in stocks. Let’s take a look at them:

Bank account:

The first thing to do is open a bank account. There are two kinds of bank accounts available for NRIs. One is the non-resident external (NRE) account and another is the non-resident ordinary (NRO) account. If you want to repatriate funds, an NRE account allows you to do so. If you have an NRO account, you can repatriate up to USD 1 million in a year for any bonafide purpose subject to satisfying documentation requirements

Demat account:

You’ll also need a demat account which you can open at the same branch. If you have a demat account that you opened as a resident, you will have to close it and transfer the shares to an NRO/ NRE account. Though direct repatriation of sales proceeds of shares acquired from income earned in India is not permitted, as an NRI, you can repatriate up to $1 million per financial year out of the balances held in the non-resident ordinary (NRO) accounts after you have paid due taxes.

Portfolio Investment Scheme:

NRIs are allowed to trade only through the Portfolio Investment Scheme (PINS) in secondary market, which is available only at designated branches. All your sales and purchases of shares have to be done through this account only. Note that you cannot speculate in shares, and have to take delivery. NRIs can also open a Non-PINS account which is essentially required for all IPOs and MF investments and also to sell shares, which were acquired as resident Indian.

Three-in-one account:

The best option for NRIs would be a three-in-one account that combines banking, trading and demat services.

Documents needed for NRE/NRO/ PINS

Here are the documents you need to open NRE/NRO/ PINS account:

• Valid Indian passport

• Visa (work, employment, student, resident permit etc)

• PINS permission letter from the designated bank

• PAN card

• Proof of overseas address like driving licence, utility bills, bank statement

• Photograph of investor