A Demat account is essential if you want to invest in the stock market. Demat accounts are registered with CDSL and NSDL. A depository participant can assist you with trading in the share market and holding your shares. Nowadays, you can easily open a Demat account online. Many websites offer free online Demat account opening.
A Demat account is mandatory for both residents and NRI (non-resident Indians) in India for trading. If an NRI wishes to trade in bonds, stocks, IPOs, and mutual funds, they should opt for a Demat account. An NRI is a person with a permanent resident outside of the country. FEMA governs all NRI transactions (Foreign exchange management act) regulations.
How does an NRI Demat account perform?
Similar to an Indian resident’s Demat accounts, a Demat account for NRI holds securities in their electronic form. Demat account for NRI is like a bank account. But instead of money, the Demat account for NRI carries mutual funds, bonds, EFTs, and stocks. Through a Demat account, online trading is secure and fast. All over the globe, investors are attracted to the Indian stock market.
Demat account for NRI is opened and operated the same way as it is for Indian residents, hence the opening procedure is almost identical. Often the account charges are the same for both NRI and Indian resident Demat accounts. The only difference between an NRI and an Indian resident’s Demat account is associated with opening the account. For an NRI Demat account, they can either be repatriable or non-repatriable.
Procedure to open Demat account for NRI:
Banks and stockbrokers who are registered with NSDL and CDSL can help NRIs open their Demat accounts online. All major stock brokerages and mutual fund organizations offer prerequisites to open an NRI Demat account online.
The NRI should have the following to open a Demat account:
- The NRI applicant’s PAN card
- The applicant’s NRI bank account
- Approval letter of Portfolio investment scheme for the NRI, issued directly by the Reserve bank of India
Documents required:
The below-mentioned documents are crucial for opening an online NRI Demat account in India
- A filled and thoroughly checked account opening form, signed by all the account holders.
- Approval letter issued by the Reserve bank of India for the Portfolio investments scheme
- Passport size photographs of the applicant with the signature written across the photos
- Scanned copies of all holders’ PAN card
- Address proof of the overseas residence
- A cancelled cheque of the NRE/NRO bank account that is linked as specified on the account opening form
- The photograph and signature of the nominee for using the nomination facility of the NRI Demat account
NRI Demat account charges:
The central depository and the broker charges Demat accounts and transaction-related fees. NRIs pay governmental taxes for their Demat account. The account charges for an NRI Demat account are as follows:
Account opening fee:
Whether NRI or Indian resident, the Demat account opening fee is for all customers. Every broker in India charges for processing and opening one’s Demat account with that brokerage. It is a one-time fee paid for opening an account.
Annual maintenance fee:
A fee is charged annually for maintaining or running one’s Demat account and is referred to as the AMC. Customers pay AMC to ensure that they can use your account next year. It is much lower than the account opening fee.
Debit transaction charges:
For every share that is sold or withdrawn from a Demat account, a small fee is charged. This nominal fee is called a debit transaction charge.
Other charges:
Also, there are some other charges associated with a Demat account, for example, pledge fees. If you wish to change your portfolio, certain brokerages are charged.
Opening a trading and Demat account is essential for trading in the Indian stock market. Opening and operating an NRI Demat account is very similar to Indian residents.
