How to Open NRI Demat Account in India| Process and Steps

Are you an NRI interested in investing in the Indian stock market? Has recent news about India becoming the fourth-largest stock market in the world piqued your interest? But how do you start? What is the process to open an NRI demat account in India?

This article will guide you through everything, from the basics of NRI trading in India to the steps involved in opening a demat account for NRIs in India.

Let us begin!

NRIs in India

As per RBI,

“A ‘Non-resident Indian’ (NRI) is someone who resides outside India but holds Indian citizenship.”

NRIs can maintain ties with India through various financial and cultural channels.

NRI Investment in Indian Stock Markets

NRIs can invest in Indian stock markets through the Portfolio Investment Scheme (PIS), either on a repatriation or non-repatriation basis.

1. Repatriation allows them to transfer investment earnings back to their home country.
2. With Non-repatriation, NRIs can manage their investments without the option of transferring funds internationally.

How Can NRIs Invest in Indian shares?

As per Reserve Bank of India (RBI) guidelines, NRIs interested in investing in Indian shares through the stock exchange should approach the designated branch of an authorized dealer (bank) authorized by the RBI to administer the Portfolio Investment Scheme (PIS). 

They need to open either a NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account under the scheme for routing investments.

RBI mandates NRI Trading and Demat account opening for holding shares, bonds, futures & options, or any other financial instrument, similar to Indian investors.

Types of Bank Accounts for NRIs

1. Non-Resident External (NRE) Account

This is ideal for depositing foreign income. 

Funds in this account are freely repatriable, meaning you can transfer them back to the foreign country without restrictions.

Income earned on NRE accounts is tax-exempt in India.

2. Foreign Currency (Non-Resident) Account (FCNR):

This is a term deposit account where you can hold funds in foreign currencies.
FCNR accounts offer protection against exchange rate fluctuations and are repatriable.

3. Non-Resident Ordinary (NRO) Account

Designed for managing income earned in India, this account lets you keep rent, dividends, or pension. While the principal amount is non-repatriable, you can transfer back your current income within certain limits.

Balances in NRO accounts are subject to Indian taxes.

Operational Details of NRI Bank Accounts

To open a Demat account for an NRI, you must be aware of these basic details about the types of bank accounts available for NRIs.

• NRIs can hold accounts jointly with other NRIs or residents. 

Resident relatives can operate the account on behalf of NRIs.

• NRE accounts are maintained in Indian Rupees, FCNR accounts in foreign currency, and NRO accounts in Indian Rupees.
• Each type of account has specific rules regarding allowable transactions. This inlcudes inward remittances, local payments, and transfers between accounts.
• Income earned in NRE accounts is tax-exempt, while income in NRO accounts is taxable.
• NRIs can avail themselves of loans against their NRE or NRO deposits for various purposes.
• NRIs returning to India permanently or changing their residential status need to adjust their accounts accordingly. You can either convert them to resident accounts or transfer funds to resident foreign currency (RFC) accounts.

Now comes the question, demat account for NRIs, how can I open it?

Opening Demat Account For NRI in India

Here are some common things to keep in mind while opening an NRI demat account in India:

• Ensure all required documents (PAN card, passport, visa/OCI, address proofs) are self-attested. Also, these must be notarized by the Indian embassy or competent authority.
• You can open NRE or NRO demat accounts depending on whether you want repatriable or non-repatriable investments.
• You must not exceed 10% of the total share capital in any Indian-listed company.
• NRIs cannot engage in intraday trading or trade in currency and commodities segments.
• You must ensure that you have 100% funds available at the time of buying or selling securities, as no leverage is provided to NRIs.

Important Considerations for NRI Demat Account Holders

You must keep these few things in mind before opening a demat account for NRI in India.

• NRIs can maintain only one bank account at a time and can hold only one PIS (Portfolio Investment Scheme) account each for repatriable and non-repatriable shares.
• NRIs are barred from trading in the currency and commodities segments of the Indian stock market.
• NRIs cannot trade in certain scrips as specified in the guidelines set by the Reserve Bank of India (RBI).

There are a few online trading platforms that allow NRI trading in India. Here is why you must choose Shoonya.

Opening an NRI Demat Account with Shoonya

Shoonya offers a simplified NRI demat account opening process.

Now, what makes it a suitable choice?

You can invest in Equities, Derivatives, IPOs, and Mutual Funds from its NRI (Non-Resident Indian) trading account.

This NRI trading account is suitable for the following:

• Eligible foreign investors (category – III)
• Non-residential individuals
• Persons of Indian origin
• Foreign nationals,
• QFI (Qualified Foreign Investor)

With Shoonya, accessing the Indian stock market for NRIs and eligible foreign investors is hassle-free and convenient.

How to Open NRI Demat Account on Shoonya?

If you wish to open an NRI trading account with Shoonya, you can follow these steps:

1. Contact Shoonya:
   • Live Chat: You can use the live chat feature on the website.

OR

• Email: Send an email to [email protected].

OR

• Call: Reach out to their sales team at +91 9098001001.

2. Once Shoonya receives your demat for the NRI request, one of its representatives will contact you.

You can open equity cash and FNO segments through NRO non-pis accounts. 

Documents Required to Open NRI Demat Account in India

Here is a list of documents required for NRI demat account on Shoonya:

1. Copy of PAN card

2. Copy of Passport & VISA (OCI/PIO card is required in case of Overseas Citizen of India)

3. Indian and Overseas Address Proof 

Indian address proof can include one of these-

• Your Passport
• Voter ID Card
• Driving license
• Notarised copy of rent agreement
• Identity card/document with address issued by the Central/State Government, Statutory/Regulatory Authorities

Overseas address proof could include one of these:

• Driving license
• Bank Passbook / Bank Statement
• Utility bills
• Notarised copy of rent agreement

4. Bank proof of your NRO account (Cancelled cheque/Bank statement/Passbook).

It should have your Name, account number, IFSC code & MICR number.

5. Income proof  (For the derivatives segment only)

Note:

You must self-attest copies of your PAN card, passport (along with Visa/OCI). Additionally, your foreign/Indian address proof should be notarized by the Indian embassy or another competent authority.

Competent authorities include:

• Authorised officials of the of scheduled commercial banks’ (registered in India) overseas branches.
• Judges
• Public notaries
• Court magistrates
• The Indian embassy/consulate general in the country where the NRI resides

• Ensure the documents are notarised in the country where you reside.
• The attesting authority should attach a “verified with original” stamp on the documents.
• They must also include their name, designation, signature, and date on the documents.

Specific Documents Required For NRI Derivative Trading

To begin derivative trading as a non-resident Indian (NRI), you’ll need the following documents:

1. NRI Status Confirmation

You must provide proof of being an NRI. For this, you could use proof that you have resided outside India for more than 182 days. Or holding Indian citizenship or being a Person of Indian Origin (PIO).

2. A valid PAN Card
3. An active Non-Resident Ordinary (NRO) bank account.
4. Submit documents verifying your address, both in India and overseas.
5. A clearing participant is mandatory for derivative trading through a clearing member.

Shoonya serves as a clearing member of NSE.

6. Additionally, you must provide one of the following as income proof:

A) 6 months’ bank statement

B) 3 months’ salary slips

C) Latest Income Tax Return (ITR)

D) DEMAT holding statement

E) Net worth certificate

F) Copy of Form 16

For investing in the equity and derivatives segment on a non-repatriable basis, NRIs can link any NRO non-pis bank account with Shoonya!

What are you waiting for?

Open your free NRI demat account today!

FAQs| NRI Demat Account in India

Source– rbi.org.in, nseindia.com

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.