It is mandatory to trade with a Demat account in India, whether you are a resident or non-resident. An NRI is defined as a non-resident Indian. Even NRIs — if they wish to trade in bonds, stocks, IPOs, mutual funds, and more, should opt for a Demat account to do so. An NRI is a person with residence outside of the country. All NRI transactions are governed by FEMA regulations.
What does a Demat account for NRIs do?
Similar to a Demat account for non-NRIs, a Demat account for NRIs holds securities in their electronic form. Hence, it is similar to a bank account. Instead of money though, it holds mutual funds, bonds, ETFs, and stocks. Using a Demat account makes online trading secure, fast, and easy. The stock market in India is attractive to investors all over the globe. In fact, it’s possible to choose from the best Demat account in India for NRI. Those seeking to create wealth cannot go without creating this account. This brings us to the question of how can NRI open a Demat account online.
Demat account for NRIs is both opened and operated the same way it is for resident Indians, so the opening procedure is nearly identical. Even the account charges for a Demat account for NRIs are often the same as they are for the demat account of a resident Indian. The only core difference between a Demat account for NRIs and for resident Indians has to do with opening the account. A customer is required to mention the kind of account they wish to open. For NRIs, the type of Demat account can either be repatriable or non-repatriable.
Account opening Procedure for NRI
The answer to the question of can NRI open a Demat account online is yes. Any of the banks or stockbrokers registered with NSDL and CDSL are possible options for NRIs to open their Demat accounts with. All the major stock brokerages and mutual fund houses including Angel One offer the prerequisites to open an NRI Demat Account. Before opening a Demat account, keep in mind that NRIs should have the following in hand or completed:
1. PAN Card of the NRI applicant
2. NRI Bank Account (NRO or NRE subtype) of the applicant
3. Portfolio Investment Scheme letter of approval for the NRI issued directly by the Reserve Bank of India.
Documents Required for NRI Demat Account
To open an NRI Demat account in India, the following documents are necessary.
- A completely filled up account opening form that has been signed by all the account holders.
- The Portfolio Investment Scheme letter of approval for the NRI issued directly by the Reserve Bank of India.
- Passport-sized photographs of the account holders with their signatures clearly written across their photos.
- Scanned copies of the PAN Card of all holders.
- Address proof of the overseas residence for all the holders.
- A cancelled cheque of the NRO/NRE bank account that is linked as specified on the form.
- The signature and photograph of the nominee for using the nomination facility of the Demat account.
NRI Demat Account Charges
Even the best Demat account in India for NRI will attract costs. This is also the case for resident Indians whose Demat accounts attract the same charges. These demat accounts and transaction-related fees are charged by the central depositories and the broker. There are also governmental taxes that are paid by NRIs for their Demat account. The account charges for Demat account for NRI are as follows:
1. Account Opening Fee (One Time)
It is common for almost every broker in India to charge all of their customers, whether NRI or resident, a demat account opening fee. This is charged for the processing and opening of one’s Demat account with that brokerage. It is a one-time fee paid during the process of opening the account. The account opening fee is often discounted due to promotional campaigns that are currently ongoing by different brokerage firms. In other cases, the ongoing promotional campaign may temporarily waive the account opening fee completely.
2. Annual Maintenance Charges (Yearly)
There is a charge associated with maintaining or running one’s Demat account. This fee is charged annually and is referred to as the AMC, or Account Maintenance Charge. It is charged to resident Indians and non-resident Indians alike by their brokerage. No matter whether you have an NRI Demat account or a residential one, you will have to pay this fee each year to ensure you can use your account for the next year. This fee is often much lower than the account opening fee.
3. Debit Transaction Charges
Whenever shares are either sold or withdrawn from one’s Demat account, a small fee is charged. This nominal fee is known as a Debit transaction cost. Customers may pay this fee at every withdrawal of funds from their Demat account. A fee is charged when you sell shares and the shares are withdrawn from the demat account. In some cases, brokers also charge a flat rate fee for every transaction. Other brokers charge based on the percentage value of every transaction.
4. Other Charges
There are some other charges associated with a Demat account such as pledge fees. One can be charged by certain brokerages if they wish to modify their portfolio.