If you wish to be an investor and purchase any commodity on the stock market, having a Demat account is essential. These accounts are registered with NSDL and CDSL, and, through a depository participant such as a broker, can be used by you in order to trade in the online share market and hold your shares.
The Indian stock market is accessible to all Indian citizens. Put simply, Indian residents, as well as Non-Residential Indians (NRIs), can open Demat accounts in order to trade on the stock market. Though NRIs are allowed to open an NRI Demat account and an NRI trading account. However, in order to open a Demat account for NRIs, there are some additional rules and formalities they have to follow.
For starters, NRIs are only allowed to hold up to 5% of their paid-up capital in an NRI Demat account. If NRIs wish to invest in IPOs on a repatriable basis, they might be required to employ an NRE or Non-Residential External (NRE) account. In order for an individual to qualify for an NRI Demat account or open an NRI account online, they are required to have lived outside of the country for 182 days or more. Therefore, if an individual owns a Demat account before they obtain NRI status, they can have their NRI Demat account converted into an NRO account.
Individuals can now open NRI account online. Before beginning the process, however, there are some documents you will first require. NRIs will have to produce basic KYC documents such as their pan card, passport as well as a copy of their visa. In addition to this, one is also required to submit a filled-out account opening form, address proof, a cancelled check and a letter from the RBI in the form of an investment portfolio letter, clearing them to open an NRI account online, and trade on the stock market through their NRI trading account.
NRIs can access NRI Demat accounts through an NRE account, or an NRO account. NRE accounts allow NRIs to trade, although in equity only. With an NRE account, funds earned outside of the country can be transferred into the account. Additionally, any interest earned on the NRE account can also be repatriated. NRO accounts on the other hand are similar to basic savings accounts and are most often used to deposit income from the country.
The Indian stock market offers a number of investors opportunities to trade. Regardless of whether you are an Indian resident or an NRI, as long as you are an Indian citizen, you are eligible to open a Demat account in India. If you are an NRI, you can open an NRI Demat account. Though Demat accounts for NRIs come with some additional restrictions, it is relatively easy to trade in the Indian stock market through an NRI trading account. Opening a Demat account for NRIs has never been easier.
Related Articles: What is the Difference Between NRI Demat Account and Resident Demat Account | Ways and means by which NRIs can deposit funds with Indian Stock Markets | How does NRIs trade in the Indian Stock Markets? | What NRIs must know about Investing in Mutual Funds in India? | Want to Open a Demat Account? Here's What You Should Know