NRI Demat Account is an investment option for Indian residents living outside India. With such an account, they can invest in the Indian stock market even though they do not reside in the country.
This is not a hidden fact that the Indian stock market is booming and this is the best of the times to invest and trade, even if you are not living in India.
In this article, we will talk about the complete procedure for the NRI Demat Account and how the NRIs can start trading in the Indian stock market along with details on pricing and frequently asked questions (FAQs). Finally, we will also inform you on how to open a demat account.
NRI Demat Account Basics
Let’s start with the basics first:
Who is an NRI (Non-Resident Indian)?
An NRI or Non-Resident Indian is someone who holds an Indian passport but has moved to a different country on a temporary basis for 180 days or more.
How does an NRI start trading in the Indian Stock Market?
There are 2 ways to do it:
Get an NRE account
An NRE or Non-resident external account is an account by which NRIs can transfer their assets earned in the foreign country to an Indian account of rupee denomination. The principal amount transferred and the interest earned can always be repatriated.
However, if you own just the NRE Account, then you would need to go through the PIS (Portfolio Investment Scheme) route which allows NRIs to buy and sell shares or debentures of Indian companies listed on a recognized Indian stock exchange. An NRE account allows you to trade in Equity segment only.
Get an NRO account
An NRO or Non-Resident Ordinary account is the one that allows you to save your Indian rupee earnings even though you do not stay in India. With an NRO account, you don’t need to do any PIS formalities and you can trade across Equity as well as Derivative segments.
What documents does an NRI need to open an NRI Demat Account?
The following documents are required to open an NRI Demat Account:
A Valid Indian Passport
In case of a foreign passport, place of Birth mentioned must be India
Copy of Visa
Overseas address proof (driving license, utility bills, bank statement, notarized copy of rent agreement)
a cancelled cheque of NRE or NRO account
Proof of respective bank and depository accounts
In case of NRE Account, the client needs to provide PIS permission letter from the designated bank (not required for NRO account). Furthermore, these NRI Trading account documents need to be attested from the Indian embassy located in the country where you reside.
There are a few NRI Trading Restrictions you must be aware of. Otherwise, carrying out trading may be very confusing for you.
What to post account opening to get started with Trading?
Almost done, really! Now you need to link up your NRO account with the trading/demat account, assuming you have one. If you don’t own a trading account yet, there are few things you need to take care of while choosing a stockbroker for yourself. Once your trading account is activated, this needs to be linked up with the NRO account.
Once you have linked to the NRO bank account with your trading account, the funds can be transferred to the latter as and when required.
Any specific things to take care of while trading?
Yea, there are few aspects that you need to consider while trading in the Indian stock market, such as:
No trading allowed in currency or commodities segments.
Even within Equity, NRIs are allowed to trade on the delivery basis and not at intra-day level.
NRIs can hold more than 10% holdings in the stock of any Indian listed company.
You can open separate trading accounts based on NRE and NRO accounts.
There could be a few more aspects that get introduced on a timely basis.
NRI Demat Account – Best Stock Brokers
There are only handful stock brokers that offer NRI Demat Account with the utmost ease. Here are those listed:
Zerodha, is definitely, one of the most prominent discount stock brokers in India. As far as NRI Demat Account is concerned:
Zerodha allows you to link up your NRE bank accounts with Axis Bank, HDFC or Yes Bank.
For NRO accounts, they can be linked directly to your trading account at Zerodha.
The Brokerage is at 0.1% or Rs 20 whichever is lower equity delivery and Equity Futures and options segments.
The documents required to open a trading account is same as mentioned above in FAQs
This also needs to be known that at times, there are a few glitches reported in the trading platforms Zerodha has to offer.
Among the full-service stockbrokers, IIFL is one of the most reliable stockbrokers for an NRI Demat account. The simple reason for that is that this stockbroker has been around for a while now in the Indian stockbroking space and understand the dynamics of the industry.
Furthermore, the broker offers a wide range of trading and investment products which makes life easier for clients looking to put their money in a diversified portfolio. This way you don’t need to open separate accounts with different financial houses and your life becomes much easier.
Lastly, the broker has different trading platforms in its kitty allowing different clients with their respective preferences of the application.
With IIFL you can invest in the following financial products:
Motilal Oswal established in the year 1987, is one of the oldest full-service stockbroking houses in the country. Although their major focus has been institutional broking in the initial years, however, of late, they have been gradually focusing towards retail broking as well.
In terms of broking, Motilal is pretty reasonable within full-service stock brokers cohort. Also to mention, Motilal Oswal came up with one of the unique trading platforms – a Trading Smart Watch App.
Are you looking for any specific answer related to NRI Demat Account? Do let us know in the comments section below and we will surely respond back with a solution.
Furthermore, if you need any assistance whatsoever, in finalizing a stockbroker for yourself or you need any advice on a recommended stockbroker, you can provide your preferences and details below:
If you wish to learn more about NRI Trading, here are a few references: