Opening a Demat Account for NRI

The Indian equity market is a great place for NRIs to invest. By investing in the stock market, NRIs can create an opportunity to grow financially. For this purpose, NRIs are supposed to open a demat account. Demat accounts store shares electronically in dematerialised form. To open a demat account, NRIs need to follow a process slightly different from resident Indians.

As per FEMA guidelines, NRI investors must obtain PIS, i.e. Portfolio Investment Scheme approval from RBI, before they can start investing in securities markets in India. This approval is required because any investments made in NRI accounts must be reported directly to the RBI system.

Key Highlights 

• NRIs can open two types of Demat accounts: Non-Resident Ordinary (NRO) for rupee investments and Non-Resident External (NRE) for foreign currency investments.

• Documents required typically include a passport, visa, PAN card, overseas address proof, and recent photographs.

• NRIs must comply with FEMA (Foreign Exchange Management Act) regulations and RBI guidelines for investing in Indian securities.

• Many Indian brokers offer online account opening facilities for NRIs, simplifying the process.

• NRIs should be aware of tax implications, including double taxation avoidance agreements between India and their country of residence.

Types of NRI Demat Accounts

To buy and sell the shares via a recognised stock exchange, the NRI will have to open an account with a designated bank that has an international presence. 

There are two types of Dematerialised accounts for NRIs:

1. NRE (Non-Resident External),
2. NRO (Non-Resident Ordinary).

Repatriation

You must have an NRE (Non-Resident External) account to invest in a portfolio through the repatriation channel.

Non-Repatriation

To invest in a portfolio through the non-repatriation channel, you need an NRO (Non-Resident Ordinary).

NRIs can open multiple NRE or NRO Demat Accounts but must pay the AMC charges for all their Demat accounts.

Open Demat Account for NRI – Procedure

Interested NRIs can open a Demat account online and offline.

To open a Demat account through the offline process, NRIs are supposed to visit the DP’s branches when they come to India. They can open a Demat account online by staying abroad. The following is the detailed breakdown of opening a Demat account offline as well as online:

The Offline Process

Opening a Demat account in India is simple and easy offline. The following is the breakdown of steps to open a Demat account offline:

1. Opening an NRI account offline requires the NRI’s presence in India. 
2. Then, they need to approach a branch of their broker and fill out the account opening form with the help of the staff present there. 
3. Moreover, they need to submit documents specified in the Official Valid Documents (OVD) list, whose details are on the account opening form. 
4. A representative at DP’s office then verifies the submitted documents with originals; then, the NRI Demat account is opened. 
5. NRIs may also walk into offices abroad and provide their completed account opening form at the nearest branch or centre of their respective bank or broker.

The Online Process

NRIs who want to open demat accounts after relocating to another country can also open the account online. The following are some simple steps to do so:

1. NRIs must first forward their account opening request using the broker’s website. 
2. After the request is received, an office representative who manages online applications reaches out to NRI clients and assists them in completing account opening formalities online. 
3. The documents required should be the same as per the OVD list. However, as the DP has no means to check the original documents, these papers must be attested by the local bank or Indian Embassy at the place of their residence. 
4. Then designated person from DP will collect the account opening form and verified documents by courier service. 
5. After this, the request will be sent to India, and the NRI Demat account will be opened after approval.

Mandatory Documents to Open an NRI Demat Account

The following are some documents that an NRI needs to submit to open a demat account in India. Those documents are confidential, and every demat account provider can ask for different documents, which the NRI will have to submit. 

The documents required can change as per the company’s requirements:

Your Current Position in India

1. Birthplace
2. Passport
3. Your Visa

If You Have a Foreign Passport

1. [PERSON OF INDIAN ORIGIN] PIO card
2. In a foreign passport, the birthplace listed is India.

The Additional Documents

1. You will require PIS permission from your designated bank.
2. The NRE/NRO PIS cancelled the cheque.
3. The address proof of an NRI’s legitimate address in a foreign country.
4. Please include the electricity bill for the foreign address and any other utility bill, such as a telephone bill or rent slip.
5. Photograph of the investor in passport size.
6. Signature of the investor.

The above-given documents are just standard documents. But, as mentioned before, the requirements for documents can change from one DP to another. You may have to submit more or even fewer documents than the above.

Always submit the correct documents, and double-check before submitting them for a smooth process.

Benefits of Dematerialised Account for NRIs

The benefits of the NRI demat account are as follows: 

• It enables NRIs to make investments in India’s stock market quickly and easily from anywhere in the world. Transactions made by NRIs are instantly reflected in their Demat account.
• The difficulty of filling and submitting the physical documentation process of the transactions is reduced.
• Transactions in NRI Demat accounts happened efficiently and smoothly at the same time.
• NRI demat account saves you from the risks of loss of physical documents, misplacement and other issues affecting your securities.
• Demat accounts for NRIs can hold a minimum amount of shares, as small as one share.
• A Demat account allows a NRI to invest in shares, debentures, ETFs, mutual funds, and more.

Conclusion

Opening a Demat account as an NRI is a crucial step for participating in the Indian stock market. While the process involves additional documentation and compliance with specific regulations, it allows NRIs to invest in Indian securities and manage their portfolio efficiently. Regularly monitoring investments, staying informed about regulatory changes, and maintaining proper documentation are key to a smooth experience. With a Demat account, NRIs can leverage India’s economic growth and diversify their investment portfolio across borders.

FAQs on Opening a Demat Account for NRI