NRIs How to Invest in Shares, Bonds and IPOs in India | Investment Option for NRIs

The NRI demat account is important for NRIs looking forward to invest in shares, bonds, and Initial Public Offers (IPOs)..

The Indian equity market is viewed as a window to prosperity by resident Indians and Non Resident Indians (NRI).

The Indian equity market is viewed as a window to prosperity by resident Indians and Non Resident Indians (NRI). So, for NRIs the first step toward investing in stocks should start with the opening of the NRI demat account. The NRI demat account is important for NRIs looking forward to invest in shares, bonds, and Initial Public Offers (IPOs). The demat account is maintained to hold shares or securities in electronic form. An NRI planning to invest in the Indian stock.

Termination of the existing demat Account

If you are planning to invest in the Indian equity market with the same demat account you had when you were a resident of the country, drop the idea. An NRI will have to close his existing demat account, the one opened before acquiring NRI status. Your demat account, which holds shares that you purchased when you were a resident, would need to be transferred to an NRO (Non Resident Ordinary) demat account.

The Reserve Bank of India imposes restriction on NRIs when it comes to investing in the securities market. As per the RBI rule, you cannot purchase or trade equities from the secondary market in your existing demat account if you are an NRI. Also, NRIs cannot invest beyond 5% in the paid-up capital of an Indian company. This is the reason why an NRI has to close the existing and open a new demat account after acquiring NRI status. An NRI can buy stock raised through Initial Public Offers (IPOs) on repatriable basis, using funds in the Non Resident External (NRE) account.

Open PINS account for shares

Buying shares from the secondary market requires NRIs to open a Portfolio Investment Scheme (PINS) account with a bank. As per RBI norms, it is important to maintain two separate accounts for repatriable and non-repatriable shares. Under PINS scheme, you can buy stocks using funds from your NRE account, and the sale proceeds will be credited to NRE account for repatriation. However, if you want to buy shares on a non-repatriable basis, then the returns will be credited to your NRO account. An NRI can open a PINS account with one bank only. Also, you are eligible for holding only one account for repatriable shares and one for non-repatriable shares. Once you regain the permanent Indian resident title, you must close your PINS account.

Documents required for PINS a/c

Approach a bank with the following set of documents to open a PINS account. However, the list may vary slightly from bank to bank. If at the time of opening the NRI demat account you are overseas, all the copies of the documents need to be attested by the Indian embassy. If you are in India, carry the originals, the bank staff will attest the copies. The documents are:

• Address proof in India
• Latest photographs
• Copy of PAN card
• Proof of address abroad
• FEM Declaration
• Copy of Visa and Passport
• Invalidated cheque leaf of NRE/NRO bank account.
• Facts about NRI demat account

NRIs can invest in stocks and securities of Indian companies, government securities, etc. 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. To create exceptional wealth from the Indian equity market, you need to be relentlessly focused on even the smallest details of the NRI demat account.

The author is director & chief financial planner, Holistic Investment Planners Extracted from Tax Guru

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