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What is a 3 in 1 account and how it can help NRIs

08 Aug 2022 0 COMMENT

To invest in the Indian stock markets, NRIs must open NRO/NRE bank accounts and then ensure demat and trading accounts in their names. Alternatively, they can also open a 3-in-1 account that offers the benefits of all the three accounts combined.

What is a 3-in-1 account?

The 3-in-1 account combines the features of all the three i.e. bank, demat and trading accounts. The 3-in-1 account enables interlinking of all three accounts, thus, aiding in smooth and faster online trading. A single application form can be used to open all three accounts.

NRIs inclined to trade in the stock market should have the 3-in-1 account to invest in various market instruments including equities, derivatives, mutual funds, initial public offerings and ETFs. Having a 3-in-1 account helps as the bank account is opened to park savings while the trading account is essentially a share broker account that allows account holders to trade in equity and other market instruments. The Demat is an online locker that holds the purchased equity shares in an electronic form.

In comparison to a 2-in-1 account offered by some broking companies, a 3-in-1 account is preferred owing to ease of fund flow between the bank and the account holder’s trading account.

What do NRIs need to buy and sell stocks?

Any investment made in stocks, ETFs or mutual funds in India must be made in the local currency. To invest in the Indian market, NRIs must have access to a bank account, a demat account and a Portfolio Investment Scheme (PIS) account for using NRE funds for investment.

Opening a bank account

NRIs may open the following bank accounts:

  • Non-resident External Rupee (NRE) account: This account is necessary so that NRIs earning money abroad can route their income to their savings account in India for investing in the market. Funds from a NRE account can be repatriated.
  • Non-resident Ordinary Rupee (NRO) account: This is a non-repatriable rupee account in which the income earned in India including dividends, interest, rent, etc. is deposited.

Opening a Demat & Trading account

  • For trading in stocks and shares or mutual funds, NRIs must open demat and trading accounts in their names. To open the trading cum demat account, an NRI must submit the following documents:
    • Valid Passport (Indian or overseas)
    • Valid Visa
    • PAN Card
    • OCI card (in case of foreign passport holders) or PIO card or PIO self-declaration
    • Overseas address proof (any one - utility bill, driving license, Govt. issued docs, bank statement, etc.)
    • Permanent address proof (any one - driving license, passport, voter ID, Aadhar, etc.)
    • If the NRI has both NRE and NRO accounts, then he/she must specify which bank account must be linked for trading and demat. This is because only one account can be mapped to each trading cum Demat account. However, one can open multiple trading and demat accounts and map different bank accounts (NRE or NRO) to each account. Also, under the Prevention of Money Laundering Act (PMLA), the NRI must sign and execute a Foreign Account Tax Compliance Act (FATCA) to open a trading and Demat account.

Benefits of opening NRI 3-in-1 Account

The benefits of opening NRI 3-in-1 account include:

  • Easy account opening as these three accounts can be opened simultaneously.
  • Seamless online investment across myriad financial products including shares, deposits, mutual funds, PMS, ETFs, etc.
  • Quick trading opportunities owing to quick fund transfer, easy account switches and timely money transfer from bank to the trading account.
  • Single login access to NRE/NRO and PIS/Non-PIS investments.
  • PIS account is completely automated to enable timely reporting of PIS transactions to the RBI.
  • TDS settlement with pay-out is automatically credited to NRO/NRE bank account after deduction of the applicable tax amount.
  • Seamless credit of money into linked bank accounts with easy repatriation process for NRE bank accounts.
  • All-in-one pricing strategy, thus, relieving you from the stress of paying towards brokerage, repatriation cost, TDS settlement charges, PIS reporting charges separately.

Conclusion

A 3-in-1 account offers you a combination of a bank, demat and trading account all linked together for a seamless and paperless investment experience. It serves as a one-stop solution for NRIs to invest in India from anywhere globally.

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): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market 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.