NRI Trading Account - Offline

•5 min read•by Angel One

Non-Resident Indians (NRI) are allowed to purchase stocks, Mutual Funds, ETFs and convertible debentures of a domestic organisation, through an NRE or NRO trading account.

Share

Topics Covered

Non-Resident Indians (NRI) are allowed to Purchase Stocks, Mutual Funds and ETFs of a domestic organization through stock exchanges. Such investments are made through an NRE or NRO trading account.

NRI Trading Account

The guidelines of the Reserve Bank of India (RBI) mandate NRIs to open a trading account (NRE/NRO) with a designated institution (Broker) authorized by the SEBI to avail benefits of investment in Indian Securities market. NRI must also open a PIS account with the designated Institution (Banks) with RBI.

Types of Accounts

NRE/NRO Trading Account:

This account allows buying and selling of equities through the Indian stock exchanges. It is available only for equity segment trading in the Indian share market. PIS accounts are used only to trade in the secondary market. It can be further sub-divided into NRE PIS and NRO PIS accounts.

NRE/NRO NON-PIS Account:

In NRE/NRO Account: To invest in Initial Public Offerings (IPO) or in mutual funds, investors must open a NRI saving account. This is, again, classified as an NRE and NRO Saving account. Transactions made through the NRE account can be repatriated, while NRO allows repatriation but with certain limits (up to 1 million USD is permitted in one financial year). Further, futures and options are allowed in the NRO Non-PIS account by FEMA regulations.

As of now, Angel One doesn’t offer non-PIS accounts for NRO investors

PIS Account

A PIS account (Portfolio Investment Scheme) is mandatory for NRI investors to settle shares/funds for the investment done through a Trading account. Our customers can open NRE/NRO PIS accounts with designated banks associated with Angel One. Users need to remember that they can open only one NRE PIS account at a time.

Angel One has partnered with several leading Indian banks to offer NRE/NRO PIS account opening. All secondary market transactions in the PIS account are reported to the RBI.

Why are two different accounts required for an NRI?

To create a seamless process, you must link your NRO trading account to your NRO bank account (non-repatriable account). One must complete the process to manage their funds earned in India.

So in all, adhering to RBI rules and regulations, NRIs are supposed to open two separate accounts for Non-Repatriable and Repatriable investments.

Several banks and brokerage firms offer trading account facilities. With the diversity of options available, investors need the knowledge to make informed choices.

Make sure to keep a few things in mind.

For easy account opening, choose an intermediary registered with the SEBI.
Brokers will charge certain account opening and brokerage charges, which you must consider. Choose the option that will cost you the least amount. Find more details regarding Trading & Demat account opening and transaction chargesfor NRI accounts.
The interface between the Bank and Demat accounts should be seamless. The depository participant is expected to provide analytics related to valuation, diversification, profitability, and a direct call of action to the traders.

You can determine the best Demat account for NRI based on these factors.

NRI Trading Account Opening

To avail themselves of the NRI Trading account, users need to fill out an application form to the designated branch of an authorized dealer. Moreover, clients must provide all details relating to any transactions done in the primary markets.

Account Opening Documents

You can find a complete list of documents required for NRIs to open a trading account with AngelOne, here.

Trade Settlement

With the knowledge of a trading account, NRIs must also understand how settlements for their investment purchases/sales are made. Payments or receipts for investments made on a repatriation basis are completed through an outward or inward remittance through regular bank channels or funds maintained in the NRE/NRO PIS account.

Points to remember before opening a PIS account

NRI investors can only participate in delivery transactions.
Intraday and Buy Today, Sell Tomorrow (BTST) trades are not an option if you are an NRI investor.
Funds should be available in the customer’s NRE/NRO PIS account, linked to Angel One, to conduct trade.
RBI restricts NRIs from selling shares purchased on the Indian stock exchanges through private arrangements or gifting.

Conclusion

You can research and open an NRO account based on your unique needs and preferences. You may also choose to go with an NRE account, which offers advantages such as repatriation benefits for both interest and principal and tax exemption on interest earned. Capital gains are taxable as per taxation policy and subject to change.

FAQs

Which is better for trading, NRE or NRO?

NRE account can be better for trading as it offers unlimited repatriation of sale proceeds and investment returns to your foreign account. On the other hand NRO accounts have a repatriation limit of USD 1 million per year.

Can I use a NRO account for trading in India?

Yes, NRIs are permitted to trade stocks, mutual funds, and other securities using funds from their NRO account. However, repatriation of funds abroad is limited to USD 1 million per financial year.

Can I use my NRE account for Demat?

Yes, you can link your NRE account to a Demat account for trading purposes. Both NRE and NRO accounts can be used with Demat accounts. NRE accounts offer the advantage of full repatriation of sale proceeds without any limit.

What is the 90% rule in trading?

The 90% rule refers to a trading statistic suggesting that 90% of traders lose money, with only 10% being consistently profitable. It highlights the high failure rate in trading due to lack of strategy, discipline, and risk management.

Should I use a NRE account or NRO in stock market India?

Use an NRE account if you want full repatriation flexibility of your trading profits abroad without limits. Use an NRO account if you're investing rupee income earned in India or don't need unlimited repatriation. NRE is generally preferred for trading as it offers better liquidity and tax benefits.

Should I open both a NRE and NRO account?

Opening both accounts is advisable if you have both foreign and Indian-sourced income. NRE handles foreign earnings with full repatriation, while NRO manages India-sourced income like rent or dividends. Having both provides flexibility for managing different income streams and investment needs.