In many ways, Non-Resident Indians (NRIs) enjoy the same rights in India as Resident Indians. But, of course, since they are located overseas, they have to follow a more regulated framework and greater compliance as compared to Resident Indians. But, this does not restrict them from participating in the Indian stock market.
In fact, the Indian stock market offers an excellent opportunity to Non-Resident Indians as well as Resident Indians to create long term wealth. For a Non-Resident Indian, the first step towards investing in the Indian equity market is to open an NRI Online demat account.
Wondering what is it? Here is everything that you need to know about NRI demat account.
Things to Know About NRI Demat Account
- Close Existing Demat Account
NRIs must close their existing demat account before acquiring that status. The shares held in the demat account shall be transferred to an NRO (Non-Resident Ordinary) demat account. Reserve Bank of India imposes a restriction on NRIs to purchase or trade shares in the Indian secondary market from the existing demat account. In addition, the NRIs are not allowed to invest more than 5% of the paid-up capital of the Indian company.
- Investing in Initial Public Offers (IPOs)
The RBI provides an exemption to the NRIs to buy stocks in IPOs on repatriable basis. However, this purchase can be made only by using the funds of Non-Resident External (NRE) account.
- Open a PINS Account
The NRIs must open a Portfolio Investment Scheme (PINS) account with a bank to buy shares from the Indian secondary market. The returns are credited to the NRO account if the shares are bought on a non-repatriable basis. The NRI demat account i.e. PINS account can be opened with one bank only. In addition, the NRIs are eligible to hold one account each for repatriable and non-repatriable shares.
- Documents required for opening a PINS Account
Address proof in India, photographs, PAN card copy, address proof in abroad, FEM declaration, visa and passport copies and Invalidated cheque leaf of NRE/NRO bank account are some of the basic documents required for opening a PINS account.
- Some Other Important Facts to Know About NRI Demat Account
- In the absence of NRI, his demat account cannot be opened or operated by Indian Power of Attorney holder. In addition, the person cannot make any payment out of India on the behalf of the NRI.
- NRI can invest in share market in India, apply for IPOs, purchase government securities, etc. through the NRI demat account.
Opening an NRI demat account is very simple. All you need to do is, select a reputed broker like Kotak Securities who can help you open an account with ease and within no time. With Kotak Securities, you can also open online demat account.