NRI Investments in India has seen a surge year on year and with a track record of an estimated 19% growth per annum for the past 10 years considering the Indian Stock Market. As an NRI, investing in the Indian Stock Market would require opening the NRI Demat Account. What is it?
In this article:
- What is an NRI Demat Account?
- Can you open a Demat Account Online?
- NRI Demat Account: Can I continue using my Resident Demat Account?
- How to open a NRI Demat Account?
- Can NRIs have multiple demat accounts?
- NRI Demat Account: Types of Markets in India
- What is a PIS Account?
- NRI Demat Account: FAQs

What is an NRI Demat Account?
NRI Demat Account is a part of the trading account which NRI opens to trade in the Indian stock market. The trading can be done online. The NRI Demat account is important for NRIs who want to invest in shares, bonds, and Initial Public Offers (IPOs). Demat Accounts are used to hold the shares in electronic form.
Can you open a Demat Account Online?
Yes, you can open a demat account online. You can access the bank websites and third party service providers such as Zerodha or ICICI Direct, where you can apply for a demat account and send the required documents to them via courier. You can also open a Demat account and NRI Bank account online through SBNRI. The process is completely online, click the button below to open a Demat account online.
Open NRI Demat Account
The upcoming segments are important to understand for Non-Resident Indians (NRIs) as well as Resident Indians about to become NRIs. The NRI Demat Account is essential in the investment carried out in shares, bonds, IPOs etc. So understand clearly.
NRI Demat Account: Can I continue using my Resident Demat Account?
No sir. You can not. Once you have acquired an NRI Status, you need to adhere to the guidelines set up by the Foreign Exchange Management Act (FEMA). If you had already invested in shares using your resident demat account, you need to initially convert your resident account into a Non-Resident Ordinary (NRO) Account.
The resident demat account must be closed and the shares that are held in that account must be transferred to the NRO Demat Account. Post the transfer, you can hold them further or sell them. The proceeds from selling the shares will be credited to the NRO Account of the NRI.
Note: You can only repatriate up to a maximum of 1 million USD per year after certifying that taxes are paid on the funds being repatriated. In addition to that, it is also noteworthy that NRIs can buy stock raised through Initial Public Offers (IPOs) using funds in their Non-Resident External (NRE) account on a repatriable basis.
How to open a NRI Demat Account?
You can access the bank websites and third party service providers such as Zerodha or ICICI Direct, where you can apply for a demat account and send the required documents to them via courier.
If you choose to not go through with any third party website, you either need to visit the bank branch in India or send the required documents to the branch in India via courier.
The documents required to open a Demat account online for NRIs are:
- Proof of Identity (POI) (Eg.: Driving license)
- Proof of Address (POA) (Eg.: Passport)
- Proof of Income (For trading in derivatives) (Eg.: Copy of ITR Acknowledgement)
- Proof of Bank Account (Eg.: Cancelled cheque)
- PAN Card
- 1 to 3 passport size photographs
Can NRIs have multiple demat accounts?
Yes. An NRI can have multiple demat accounts. The usage of these multiple demat accounts can be understood under the concepts of:
- Repatriation: NRIs must have separate demat accounts for repatriable (NRE) and non-repatriable (NRO) shares which means if you invest through your NRE account, the money you receive after selling the shares/stocks is completely and freely repatriable whereas investments through NRO accounts will have to be initially settled by paying applicable taxes and then they can be repatriated. NRE accounts are used to buy shares (equity) on a repatriable basis and NRO accounts are used to invest in shares (equity and derivatives) on a non-repatriable basis. The NRE/NRO Accounts can be used to invest in the primary market without PIS (Portfolio Investment Scheme) (eg: IPOs, Mutual Funds)
- Market Variation: In order to invest in the secondary market you need a separate bank account to hold your investment funds that will be linked to the Portfolio Investment Scheme (PIS). This account can not be your regular NRE/NRO account and this account will be linked to a demat account to hold your shares as directed by RBI.
The previous segment must have created some doubts for NRIs: What are primary and secondary markets? What is PIS? Let’s understand these too to get a complete overview.
NRI Demat Account: Types of Markets in India
There are two types of investments markets that can accept investments from an NRI or Resident Indian:
- Primary: A primary market deals with the introduction of fresh stocks and bonds that are rolled out for sale for the first time. Examples are Initial Public Offerings (IPOs) for stocks. All Mutual Fund investments also fall under the Primary Market.
- Secondary: A secondary market deals with the trading of listed stocks which means that the secondary market is a place where investors buy and sell securities they already own. It is what most people typically refer to as the “stock market,” though stocks are also sold on the primary market when they are first issued.
Now, Investments in the primary market doesn’t require a PIS Account whereas PIS Accounts are mandatory for investments in the secondary market. Let’s now understand what these PIS Accounts are.
What is a PIS Account?
The Portfolio Investment Scheme (PIS) account holds the investment amount of the NRI. The purchases are directly debited from this account, and the earnings are credited to the account. The PIS permission letter is required for opening a demat (for holding stocks in electronic form) and trading account (account with a registered broker for trading in the market) that is issued by the banks. PIS Bank Accounts are essential for investment in the secondary market (stock market) as they are used to maintain and track the investment caps for NRIs as established by the Reserve Bank of India. (An NRI can not invest more than 10% of the paid-up value of shares of an Indian Company)
NRIs can purchase and sell shares and debentures of Indian companies on a recognized stock exchange using their PIS Accounts.
The PIS Accounts can be opened at designated branches of all the major banks in India and through third party providers such as Zerodha or ICICI Direct to ease out your investments in shares.
You either need to visit the designated bank branch in India or send the required documents to that branch in India or the third party providers via courier in order to open the PIS Account.
Also Read: PINS Account: NRI Stock Trading in India
The documents required for a Portfolio Investment Scheme (PIS) account for NRIs are:
- Copy of valid passport (pages with your name, address, date of birth, date and place of issue, expiry date, photograph, address, signature)
- Proof of NRI status (by way of valid Employment/Residence Visa copy or Work/Residence Permit)
- Copy of Indian PAN card
- Proof of Overseas and Indian Address
- Recent passport size colour photograph
There are certain restrictions for NRIs while investing in the share market using their PIS Accounts in India, which are:
- An NRI cannot transact in India except through a stock broker.
- NRIs cannot trade shares in India on a non-delivery basis*, that is, they can neither do day-trading nor short-sell in India. If they buy a stock today, they can only sell it after two days.
- NRIs must carry out all the purchase/sale from one designated bank branch only
- The NRI demat account cannot be opened or operated by an Indian Power-of-Attorney holder in the absence of the NRI. The person also cannot make payment out of India on behalf of the NRI.
There are certain ceilings NRIs are bound to:
- 5% of the paid-up value of shares of an Indian Company each for repatriable and non-repatriable basis which means that the maximum ceiling per Indian Company for all NRIs will be 10%, which can be increased to 24% if the company passes a resolution for the same
Basic term definitions
- Non-Delivery Basis: Delivery means you buy the stock but “hold” it overnight. In the cash segment, you have to wait for two business days after the transaction to receive the actual delivery. Eg: If you bought on Tuesday, then you get the delivery on Thursday after closing. Non-delivery means you sell on the same day when you buy (Also called “day trading“). Eg: You buy a stock on Tuesday and sell it on Tuesday.
- Short-Selling: Short selling is a method of borrowing stocks and selling them in the open market and then rebuying the same stocks at a lower price. The strategy here is to benefit from the falling prices of the stocks.
NRI Investment in India has always been looked at with a layer of doubt and confusion. It’s time to go beyond that. You can get an investment advisory from experts at SBNRI and sort your NRI Investments in India. Contact us using the button below.
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NRI Demat Account: FAQs
Yes. An NRI can have multiple demat accounts. The usage of these multiple demat accounts can be understood under the concepts of Repatriation and Market Variation. Click here to know more.
Yes. A PIS Account is mandatory for NRIs to invest in the secondary market. A PIS account is basically required by the regulator to monitor investment limits by NRIs in the stock market. Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs) are allowed to invest in the secondary capital markets in India through the Portfolio Investment Scheme (PIS).
Yes. NRIs can invest in Indian equities by investing their money into stocks listed on the National Stock Exchange of India Ltd. (NSE). To be eligible to invest into stocks, NRIs need to be a part of the Portfolio Investment Scheme (PIS) that will allow them to trade stocks.
A non-repatriable demat account is an NRI demat account linked with an NRO bank account. In this account, there are restrictions on transferring money to a foreign country. As per RBI rules, the dividend amount and interest earned are fully repatriable, however the principal is not repatriable.
A repatriable demat account is an NRI demat account linked with an NRE bank account. All the proceeds from selling securities and profits from investments that are credited to the NRE bank account can be transferred abroad.