Process of Opening an NRI Demat account

Last Updated: 28 Oct 2024

Today, opening a demat account in India is done in just a few clicks. Easy, convenient and effective, any budding investor can start their journey in the world of financial markets by opening a demat account. 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? To demystify this topic, let us take a closer look at opening a demat account for NRIs below:

How is the term NRI defined?

According to the Foreign Exchange Management Act of 1999, the term 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. Fortunately for NRIs, the procedure of opening a demat is quite similar to that for resident Indians. It is also operated and charged similarly.

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

Types of NRI demat account

• NRE (Non-Resident External) Demat Account:
  The purpose of this type of demat account isfor 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 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?

The procedure to open a Demat account as an NRI is quite simple and convenient:

• 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 is 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 evidenced, 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. You can also streamline this process by using a Demat account app, which simplifies the paperwork and tracking of your investments.