What Happens to Your Demat Account When Your Residency Status Distorts
In case you shift abroad for any purpose, such as moving to another country due to an employment transfer, your residency status undergoes a change. You are then termed as an NRI or a non-resident Indian. In the event of this taking place, your financial matters must be settled in your country of residence. This includes your resident account and your investments. Rules and regulations for non-resident Indians are different from those that are applicable to residents. So what do you do?
- Demat Account Status Change
As a resident Indian, you may have gone through a demat account opening procedure and had no stress opening an online demat account. If your status changes to that of ‘NRI’, you can still continue to invest and trade in the stock market in India. However, the status of your account will see a change. Your savings account (s) will change to what is called an NRO account or a Non-Resident Ordinary Account, and similarly, any fixed deposits you hold will alter too, to an NRO Fixed Deposit. Consequently, your demat account will also be an NRO demat account.
You should be aware of certain rules pertaining to your demat account status. As per the regulations set forth by the Foreign Exchange Management Act or FEMA, if you move out of India, you cannot have any resident accounts. Whether you shift due to employment or further education, the rules still apply. In such cases, your demat account status must change to that of NRO. If you hold a demat account, your existing account will be closed by your bank or your brokerage, and you will have to open a new account with the NRO status attached. You can easily run a demat account status check after the procedure is carried out.
The process to alter your demat account status is not hard. All you need to do is fill out a form and sign it, and you may be a single holder or have it with a joint holder. You need to open an NRO account under a scheme called Portfolio Investment Scheme (PIS). A form pertaining to this will also have to be filled in with your details. Furthermore, information about all shares that you have purchased will have to be submitted as well. With your latest demat statement, all this must be presented to the bank or brokerage where your existing resident account is held. Moreover, your existing shares get transferred into this account.
You can still enjoy worry-free trading even if your status changes, utilizing the funds in your NRO savings account, and similarly, what you earn may be deposited here. At Motilal Oswal, you can continue your trading journey wherever you may be.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account
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