NRI Demat Account Online Procedures & Charges
If you are an NRI and are considering investing in the Indian Capital Markets, it is essential to open a Demat Account. But first, let's try to understand the term "NRI," i.e. a Non-Resident Indian. According to the Income Tax Act, "NRI is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India". You will be considered an Indian citizen or a person of Indian origin if you satisfy the following conditions:
1) Your stay in India is for more than 182 days in the relevant financial year or
2) You have resided in India for more than 365 days during the last four financial years and more than 60 days during the last financial year.
But an NRI enjoys some privileges if they satisfy the following cases:
i.) While being a citizen of India, if you leave India in any previous year as a crew member of an Indian ship or for employment outside India. (Say Case 1)
ii.) Being a citizen of India or a person of Indian origin, you visit India in any previous financial year.
For example, you are an IT Professional, staying in Canada for the past four years. You come to visit your hometown in India for 25 days. Therefore, you become a Non-Resident Indian (NRI), under the above definition.
Now, you want to invest a certain amount of your savings in Indian Companies through the stock market. In this case, let's understand what procedures you need to follow before you can start investing.
Additional Read: Documents Required To Open A Demat Account
Process of NRI Demat Account Opening
As a Non-Resident Indian (NRI), you can open a Demat account with any of the brokers registered as Depository Participant with Central Depositories Services Ltd. (CDSL) or National Securities Depositories Ltd (NSDL). However, you have to follow the rules of the Foreign Exchange Management Act (FEMA).
To open a Demat Account as an NRI, you will first have to choose between the ‘Repatriable Demat Account’ or ‘Non-Repatriable Demat Account’. If you choose a Repatriable Demat Account, you can transfer funds abroad. With a Non-Repatriable Demat, you cannot transfer funds abroad. If you hold this type of account, you need to link it to your NRO savings account.
You can open an NRI Demat Account either online or offline. These are the steps to follow:
- Choose the DP with which you want to open your Demat Account.
- If you are in India, you can visit the DP’s office and complete formalities such as filling up the Demat Account opening form. You can also do this online through the DP’s website.
- The next step is to submit all the necessary documents required for verification. These need to be attested by a local bank or the Indian Embassy in the country of residence.
Documents Required to Open an NRI Demat Account
To open a Demat account, you are required to submit the following documents with Depository Participants:
- Copy of Portfolio Investment Scheme (PIS) permission letter from Reserve Bank of India
- Copy of FEMA Declaration
- Copy of PAN Card
- Overseas address proof: copy of driving license/foreign passport/utility bills/bank statement (which should not be older than two months)/notarized copy of rent agreement/leave and license agreement/sale deed
- Indian address proof, if any;
- Passport size photograph;
- Proof of Bank account (A cancelled cheque leaf of your bank account)
- In case of Indian passport, copy of valid passport with the place of birth as India and Copy of valid visa
- In case of Foreign Passport: Copy of valid passport, Copy of PIO/OCI card
·Being a Non-Resident Indian, you can open a Demat account by linking your Non-Resident Ordinary (NRO) /Non-Resident External (NRE) Bank Account.
You have to keep in mind that you can only use the NRI Demat account linked with NRE bank account for trading or investment in equity only, and you are not allowed to invest in the derivative segment of the Indian stock market. On the other hand, you can utilize the Demat Account linked with NRO Account for trading or investment in Equity and trading in the derivatives segment. Further, you must remember that NRIs are not allowed to trade currency or commodity markets in India.
Additional Read: Features and benefits of a Demat Account
Charges for Demat Account for an NRI
Following are different types of Demat account charges to be paid by you as an NRI:
- Account opening charges (AOC)
- Annual maintenance charges (AMC)
- Good and Service Tax (GST)
Account opening charges differ from broker to broker. The charges can range from Rs 300 to Rs 4000.
Similarly, Annual Maintenance Charges (AMC) also differ from broker to broker. The broad range of charges can be anywhere between Rs 75 to Rs 500.
Lastly, remember that the component of GST is levied at 18% over and above the AOC and AMC.
As an NRI, you can open a Demat Account in India to trade in equities and other securities. However, as outlined, the process for opening an NRI Demat Account is slightly different from one opened for an Indian citizen. If you follow the steps mentioned above, you can open a Demat Account to trade in Indian markets.
1. Can an NRI have a Demat Account?
Yes, NRIs can open Demat Accounts in India to trade in Indian markets. However, all NRIs must follow the rules of the Foreign Exchange Management Act (FEMA) to open and operate Demat Accounts. There are two kinds of Demat Accounts that NRIs can open – Repatriable Demat Accounts and Non-Repatriable Demat Accounts. Under the former, the NRI can transfer funds abroad. However, the NRI will not be permitted to transfer funds abroad under the latter.
2. Can an NRI open a Demat Account online?
Yes, as an NRI, you can open a Demat Account online from anywhere in the world. All you need to do is go to the DP’s website, fill up the Demat opening form and submit all the necessary documents as per the Official Valid Documents (OVD) list.
3. What is the difference between NRI Demat and normal Demat Account?
NRI Demat Accounts are specifically for non-resident Indians. These accounts have to be linked with an NRE or NRO bank account. On the other hand, a normal Demat account is for Indian residents only. It can be linked with a regular bank savings account. The procedure to open both accounts varies slightly. Apart from that, the charges and the services are all the same.
ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product.