Can NRIs Create a Demat Account in India for Stock Investments?

jainambrokingseo
Mar 26
2 min read

Understanding Demat Accounts for NRIs

A Demat account is essential for investing in the Indian stock market. Non-Resident Indians (NRIs) can open a Demat account to trade in stocks, bonds, and mutual funds. However, certain guidelines must be followed.

Types of Demat Accounts for NRIs

NRIs can open two types of Demat accounts in India:

1. Repatriable Demat Account

Linked to an NRE (Non-Resident External) account.
Allows fund transfers abroad.
Requires RBI’s Portfolio Investment Scheme (PIS) approval.

2. Non-Repatriable Demat Account

Linked to an NRO (Non-Resident Ordinary) account.
No fund repatriation beyond the RBI’s limits.
Does not require PIS approval.

How NRIs Can Open a Demat Account

Follow these steps to open a Demat account in India as an NRI:

1. Choose a Depository Participant (DP)

Select a SEBI-registered DP such as banks, brokers, or financial institutions.

2. Submit Required Documents

NRIs must provide:

PAN Card (mandatory).
Passport & Visa copy.
Overseas address proof.
Indian address proof (if applicable).
NRE/NRO bank account details.

3. Complete KYC Verification

Identity and address verification must be completed as per RBI and SEBI regulations.

4. Sign the Agreement

A formal agreement with the DP ensures compliance with trading regulations.

5. Get PIS Approval (for Repatriable Accounts)

PIS approval is required to invest in Indian stocks through an NRE account.

Investment Options for NRIs via a Demat Account

1. Direct Equity

NRIs can invest in stocks listed on BSE and NSE through a registered broker.

2. Mutual Funds

Investing in Indian mutual funds is possible without PIS approval.

3. Bonds and NCDs

NRIs can invest in government bonds, corporate bonds, and Non-Convertible Debentures (NCDs).

4. IPOs (Initial Public Offerings)

NRIs can apply for IPOs through their NRE or NRO accounts.

Restrictions on NRI Demat Accounts

NRIs cannot trade in intraday or currency derivatives.
Only one PIS-linked Demat account is allowed per NRE account.
NRIs cannot invest in agriculture-related stocks.

Tax Implications for NRIs

1. Capital Gains Tax

Short-term capital gains (STCG): 15% on profits from stocks held for less than 12 months.
Long-term capital gains (LTCG): 10% on gains exceeding ₹1 lakh annually.

2. Dividend Tax

Dividends earned by NRIs are subject to TDS (Tax Deducted at Source) at 20%.

Conclusion

Yes, NRIs can open a Demat account in India with Jainam and invest in various financial instruments. By choosing the right account type and following regulatory guidelines, NRIs can efficiently manage their investments in the Indian stock market.