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How to Open an NRI Demat Account

12 Jan 2023 0 COMMENT

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.

Procedure 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 cancelled check, and an investment portfolio letter from the RBI.

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.

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. 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. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.