NRI Demat Account Opening Process

When approached with the right amount of research and enthusiasm, financial markets can present lucrative opportunities to investors of various kinds. As long as you have adequate capital to spend and a fair idea of trading basics, you can get started with trading in no time. A large part of this benefit has to do with the switch of the markets to electronic securities as well as the ease with which you can open a demat account today.

But does this ease of opening a demat account also extend to NRIs? Since NRIs are recognised as non-residents, do they have to undergo a different procedure of opening a demat account ? Such queries are natural, and if you are an NRI trader looking to invest in the Indian financial markets, they are particularly relevant. To demystify this topic, let us take a closer look at opening a demat account for NRIs below:

How is the term NRI defined?

The abbreviation NRI stands for Non-Resident Indian and is a commonly misunderstood term. The most accurate definition of NRI in India can be understood as per the country’s Foreign Exchange Management Act of 1999. According to FEMA, NRI is used to refer to an individual who is an Indian citizen or an Indian-origin citizen who lives in a foreign country for employment, business or other reasons. The term NRI is also used to refer to an Indian citizen who has lived in India for less than 182 days during the preceding financial year.

NRI Demat Account

Indian financial markets, particularly stock markets, hold immense value for investors from around the world, including NRIs. If you are an NRI looking to invest in Indian markets, you will be satisfied to know that the procedure of opening a demat account for NRIs is quite similar to that for resident Indians. It is also operated and charged in a similar manner.

The only manner in which the account opening process for NRIs is different than usual is that you have to declare your status (resident or NRI) and then choose the suitable subtype of NRI demat account for your needs.

Types of NRI demat account

  • NRE (Non-Resident External) Demat Account:
    This type of demat account falls under the Repatriable subtype and its purpose is for NRIs to buy or sell securities on a repatriable basis. Keep in mind that with an NRE Demat account, you can only make investments in the stock market and have to go through the Portfolio Investment NRI Scheme, or PINS route. With an NRE demat account, both the principal amount and interest generated are repatriable.
  • NRO (Non-Resident Ordinary) Demat Account:
    This type of demat account falls under the Non-Repatriable subtype and is used to trade in shares, including futures and options, on a non-repatriable basis. When you open a demat account under NRO, you do not have to go through the PINS route and can repatriate up to $1 million in a financial year. Moreover, the principal amount is repatriable while the interest generated is non-repatriable.

How to open an NRI Demat Account?

This leads us to the last order of business that an NRI must fulfill to get started trading in Indian financial business - opening a demat account. Here is the simple and convenient procedure to open a demat account that you must follow:

  • As an NRI looking to open a demat account in India, the first step you must take is to compile all the necessary documents for the process. Among these, the most essential are your PAN card, details of your NRI bank account, and a PIS permission letter issued by the Reserve Bank of India.
  • Ensure that all your documents are verified by the local Indian Embassy or by a competent authority approved as per the guidelines laid out by SEBI.
  • Visit the website of your preferred Depository Participant (DP). Make sure to look for the best services in the market. For instance, DPs such as IIFL offer traders the opportunity to open a free demat account online.
  • On the website of your preferred DP, search for and select the option to ‘open a demat and trading account’. A majority of DPs offer the two services as a single feature.
  • Fill out the account opening applications and upload scanned copies of all the required documents.
  • Upon submitting the required documents, your application will be processed by the DP

Conclusion

As explained above, the Demat account opening process for NRIs is not too different from that for resident Indians. All that you must ensure is to select the correct subtype of account when filing the paperwork to open a demat account with your preferred DP.

If you are an NRI on the lookout for a trusted DP with a high-performing trading platform, look no further than IIFL. IIFL allows traders and investors to open an all-in-one account to trade in multiple securities online and offers high-quality market analysis and research.

Open Demat Account at IIFL