How NRI can Open Demat Account in India

There are many ways for Non-Resident Indians (NRIs) to invest in India. However, NRIs who want to invest in the Indian stock market must open an NRI Demat account. Here is a mini guide to Demat accounts for NRIs.

Can NRIs Open a Demat Account in India?

Non-Resident Indians can open a Demat account in India to trade in stocks, just like resident Indians. To open NRI Demat account in India, NRIs must follow the Foreign Exchange Management Act (FEMA) rules. They must also get a Portfolio Investment Scheme (PIS) approval from a designated bank to use a Demat account in India. As part of the PIS, NRIs can purchase shares of Indian companies through a registered stockbroker on a repatriation or non-repatriation basis.

With a Demat account, securities are kept in an electronic format, so physical share certificates are no longer needed. There are two types of NRI Demat accounts – NRE Demat accounts and NRO Demat accounts.

The NRE account is used to keep foreign currency earnings in Indian rupees. This account converts foreign dollars to Indian rupees. On the other hand, an NRO account is a savings or current account kept by NRIs in India to manage their income obtained in India from sources such as pensions, dividends, rental income, and so on.

The NRE account is external and hence is repatriable. On the other hand, an NRO account is a resident account; thus, funds are non-repatriable over the $1 million per year restriction.

Process to Open an NRI Demat Account

An NRI can open a Demat and trading account with a stockbroker, depository participant, or bank accredited with NSDL and CDSL. As a result, stockbrokers provide two-in-one account services, whereas banks provide three-in-one account services. However, all three provide the requirements for opening a Demat account.

To begin, the NRI must select either a repatriable Demat account or a non-repatriable Demat account based on their preference. Then, you can follow these steps to open an NRI Demat account:

1. Download and complete the Demat account application form
2. Attach the relevant paperwork (The Indian embassy or another appropriate body must self-attested and notarize the documents)
3. Submit the completed form to the individual's preferred participant

Documents Required to Open an NRI Demat Account

• NRIs will have to show documents like their PAN card, passport, and a copy of their visa as part of the KYC process.

• A completed NRI Demat account opening form, proof of address, a canceled check, and an investment portfolio letter from the RBI.

Types of NRI demat accounts:

NRIs can maintain two types of demat accounts – repatriable and non-repatriable. They also need a basic PINS (Portfolio Investment Scheme) Account to buy shares from the secondary market.

Repatriable Demat Account:

Repatriable funds (funds that can be taken abroad) need to be kept in a separate bank account, i.e. an NRE account. Such accounts keep funds that are brought in from abroad. Proceeds from sales of such funds are allowed to be taken abroad. Such investments need to be maintained in a repatriable demat account.

Non-repatriable Demat Account:

Non-repatriable funds (funds that cannot be taken abroad) must be kept separate from repatriable funds. Such funds should be held in an NRO account. The proceeds from the sale of such investments cannot be taken abroad. The investments need to be maintained in a non-repatriable demat account. NRIs are allowed to invest in IPOs on a repatriable basis by using funds in their NRE accounts. However, an NRI cannot invest in the secondary market through this route.
Most DPs do not levy any demat account opening charges; however, customers have to pay the necessary service charges for transactions conducted through the demat account.
So, open a demat account in India and start investing.

How To Open An NRI Account In India From Anywhere | NRI Account Opening Online ICICI Direct

Conclusion

Indian citizens and people with Indian roots can fill out an account opening form to open a Demat account in India to trade on the Indian stock market. Even though there are some extra rules for NRIs with Demat accounts, it is still easy to trade on the Indian stock market with an NRI trading account and participate in India’s growth story.