No one wants to miss a good opportunity in a stock market, and the Indian stock market is sitting on the edge, just waiting to blow up; who wouldn’t want to invest in such a market. If you are a non-resident Indian and want to invest in securities that the Indian stock market has to offer but don’t know the way to the treasure. We will tell you everything you need to know. This article will cover whether an NRI can open a Demat account? Which type of account can be opened? What is the process involved?
Can an NRI Open a Demat Account in India?
The answer to this question is Yes! An NRI can most definitely open a Demat account in India. Any NRI willing to invest in the Indian stock market can open an NRI Demat account. RBI facilitates NRI Demat accounts with the help of PIS accounts. Portfolio Investment Scheme (PIS) accounts are special accounts by which NRIs can invest in Indian securities such as stock, bonds and mutual funds.
What is an NRE and NRO account?
To have an NRI Demat account, first, you need to have an NRE or NRO bank account. These Non-residential external (NRE) and Non-Resident Ordinary(NRO) accounts are special accounts that both help NRIs to invest in Indian markets; the main difference between them is:
Now, if the income of a person is entirely in a foreign currency, an NRE account is a must as you can fully repatriate all the money and interest earned through investing in securities. But if you are someone who has sources of income in India, such as rent or a passive business, you must opt for an NRO account. However, repatriation is restricted in an NRO account, and only up to $1 million can be repatriated in a year.
You can deposit any currency in the NRE, but in the NRO account, the currency should only be Indian rupees generated in India. The money in the NRE account can be transferred to another NRE account or an NRO account, but vice versa is not possible.
In an NRO account, you will be charged taxes on the interest, but in an NRE account, the money and interest earned are tax-exempt. The deposits in the NRE account are subject to currency fluctuation and the exchange rate of the currency, which is not the case in the NRO account.
Documents Required to Open an NRI Demat Account?
To open an NRI Demat account when you already have a PIS or non-PIS bank account with NRE or NRO functionality, you can find a stockbroker who will help you register with a depository. For that, you will require a few documents such as:
- PAN card
- ID proof (Passport)
- Proof of NRI status ( work permit/visa etc.)
- Address proof (Rent bills/electricity bills etc.)
- Proof of bank account (Passbook/Cheque etc.)
You need to submit these primary documents with other documents that the stockbroker might ask for, such as a PSI permission letter, passport size photographs, etc., for validation. Opening an NRI Demat account is not complicated. Proof of NRI status is the only additional document required to submit since most NRIs who went overseas already have a PIS NRE account.
Any NRI can open a Demat account, and the process has become extremely straightforward with everything moving online. But before you start investing, you should also understand the charges on an NRI Demat account since they tend to have a higher brokerage, AMC and opening charges. Open your Demat account today and invest in the booming Indian economy overseas.