Most Non-Resident Indians (NRIs) invest in the Indian stock markets to build wealth over the long-term. The first requirement as an NRI wanting to invest in the equity market is to open bank and dematerialization accounts.
Here is a guide that helps you understand more about these accounts.
Close existing accounts that you may hold
If you held a demat account while being a resident Indian, you will need to transfer all your holdings to a Non-Resident Ordinary (NRO) account. Once the transfer is complete, you must close the account. You may either continue holding your investments or sell these.
If you exit your investments, the sale proceeds will be credited to the NRO savings account, which has certain limitations on fund repatriations. Moreover, you will not be allowed to make any new purchases in the secondary market from this account due to the restrictions levied by the Reserve Bank of India (RBI). However, through the NRO dematerialization account, you may invest in Indian stocks through the primary market.
Open a Portfolio Investment Scheme (PINS) account
If you want to invest in the secondary market, you need to open a PINS account with any bank. Through this scheme, you are allowed to buy shares through the Non-Resident Rupee (NRE) account and the sale proceeds are credited to the same account from where it may be repatriated. If you choose the non-repatriable option, the sale proceeds are credited to your NRO account.
It is important to remember that you need to open two accounts to hold repatriable and non-repatriable investments. You will also need to open a separate account linked to your PINS account. If you again acquire the status of a resident, you need to close the PINS account.
When you open a demat account (PINS dematerialization account), the following documents need to be submitted:
- Indian address proof
- Permanent Account Number (PAN) card copy
- International address proof
- Visa and passport copy
- FEM declaration
- A canceled check of the NRO/NRE account
NRI demat account facts
- As an NRI, you may invest in government securities and stocks of Indian companies
- In your absence, the NRI dematerialization account is not operational by an Indian Power of Attorney (POA) holder
- The POA is also not allowed to make payments outside the country on your behalf
To ensure you are able to maximize your returns through investing in the Indian stock market, it is important you pay close attention to all the details related to NRI dematerialization accounts. This ensures there are no unnecessary problems that arise in the future. To know more about NRI demat account online, you may do comprehensive research on the Internet.