You may have moved out of India but you may still want to invest in Indian companies. This could be because of opportunities that Indian equity markets offer or due to your familiarity with Indian equity markets. But you have a number of questions. How can NRIs invest in stock markets in India? Are there any restrictions on NRI investment in equity markets? Can NRIs trade in derivatives?
You have been told it is not so simple. You need multiple types of banks accounts, trading accounts and demat accounts for different kinds of transactions. That is indeed true. But why do you need multiple accounts? This confusion has been holding you back.
However, if you understand the rationale behind the need for many accounts, things will start falling in place. For instance, the sale proceeds of investments made through repatriable funds (NRE accounts) are repatriable; otherwise there are restrictions on repatriability.
How do you ensure whether purchase was made out of repatriable funds? If the funds used to purchase shares came from NRE account, the funds were repatriable. Having multiple accounts makes it easier for the intermediaries to keep these checks and comply with RBI and FEMA regulations.
Opening the accounts is a one-time exercise. Financial intermediaries take care of the account opening process. In this post, we set out to clarify some of the doubts many NRIs have about equity investments in India.
Portfolio Investment (NRI) Scheme (PINS)
PINS is a scheme by the Reserve Bank of India and permission under PINS scheme is mandatory for any NRI or PIO who wishes to purchase and sell shares or mandatorily convertible debentures of Indian companies on a recognised stock exchange in India. Application for PINS permission can be made through a designated bank branch by filling in a PINS application form.
PINS account can be opened in designated branches of banks (authorised dealers) as authorised by RBI under the PINS scheme.
Only an NRI/PIO can open a PINS account. And an NRI/PIO can have PINS account with only one bank at a time. Hence, if you already have a PINS account with ICICI Bank and want to shift to Kotak Mahindra Bank, you need to close your PINS account with ICICI Bank and open a new one with Kotak Mahindra Bank.
Your designated bank provides a daily reporting of your transactions to Reserve Bank of India.
To trade in equity markets, you need to have a bank account, a trading account and a demat account. To participate under PINS scheme, you need to open all three accounts under PINS scheme. Hence, in this post, depending upon the context, PINS account may mean a bank account, a trading account or a demat account.
Read: How can NRIs invest in Mutual Funds in India?
Why does an NRI need a PINS account to invest in stock markets?
A PINS account makes it easier to comply with certain regulations under FEMA (Foreign Exchange Management Act), 2000. There are limits on foreign ownership in a company. The limit varies across sectors. An NRI or PIO can purchase shares up to 5% of the paid up capital of the company. Additionally, all NRIs/PIOs together can purchase up to 10% of the paid up capital of the company.
Hence, to keep track of NRI investments, it is necessary to have a separate bank, trading and demat account under PINS scheme, where only such transactions by an NRI are done. The bank (with which you applied for PINS approval) provides regular reporting of your transactions in the stock exchanges to the Reserve Bank of India. This helps RBI keep track of foreign ownership in the companies.
Please note, in a recent Cabinet meeting, it was decided that NRI investments in Indian companies on non-repatriable basis shall be considered domestic investment (at par with investments by resident Indians). However, investment on repatriable basis shall still be considered foreign investment and will be governed by extant ownership caps.
Is PINS Account enough? Or do you need something else too?
No, PINS account is not enough. There are a set of transactions that are not permitted under PINS.
- Sale of shares purchased in Initial Public Offering (IPO)
- Subscription to IPOs (Purchase of shares in IPO)
- Sale or purchase of mutual fund units
- Sale of shares received through gifts (even if the gifted shares were purchased under PINS)
- Sale of shares bought as a resident
- Sale of shares received in bonus
- Derivative transactions
Hence, if you had purchased shares of a company in an IPO, you cannot sell off the shares under the PINS scheme (through PINS account). To take care of such investments by NRIs, a regular trading account, bank account and demat account is also required. We will call such accounts Non-PINS accounts.
What NRIs are not allowed to do in equity markets?
- Intra-day trading
- NRIs can only trade on delivery basis.
- Buy Today Sell Tomorrow (BTST) is not allowed
- NRIs need to have 100% funds at the time of purchase.
- Short selling is not allowed. You need to own the stocks before selling.
- No adjustment of purchase against sales consideration can be done. NRIs are required to make bill-to-bill payments.
Can NRIs trade in derivatives?
Yes, NRIs can trade in derivatives but only through Non-PINS NRO account. Trading in derivatives is not allowed under PINS scheme or on repatriable basis.
You need a bank account, a trading account and a demat account
To trade in the stock markets, you need three accounts:
- Bank account: To provide funds for purchase and receive proceeds of sales from equity investments.
- Trading Account: A trading account is opened with a brokerage firm such as ICICIDirect, Sharekhan, Zerodha etc. A brokerage firm is a member of stock exchange (BSE, NSE) and you can place your orders on the exchanges through these entities.
- Demat Account: Such an account is opened with a depository (NSDL, CDSL) through a depository participant (say ICICI Bank). Any shares/securities purchase are stored in dematerialized (digital) form in your demat account.
When you purchase shares, funds are fetched into your trading account from your bank account and purchased stocks go to your demat account. When you sell shares, the shares are fetched from your demat account and the sales proceeds are credited to your bank account. This is a simplistic representation. The actual cycle is a bit complex but the end result is same.
What is a PINS Bank Account?
A PINS bank account is just like a regular NRE or NRO savings bank account. The limitation is that you cannot route personal banking transactions or any transactions pertaining to securities acquired other than PINS such as IPO through the PINS account.
Find out more about NRE and NRO savings accounts here.
There are two types of PINS bank accounts.
- NRE PINS Account: This account can only be funded from your NRE/FCNR accounts or from inward remittances through normal banking channels. You need this account if you want to repatriate sale proceeds (net of taxes) of your equity investments.
- NRO PINS Account: You need this account if you need to trade/invest out of your funds in India. The sales proceeds will be non-repatriable (will be subject to repatriation restrictions on NRO accounts).
Depending upon your requirements, you can open a NRE PINS or a NRO PINS or both types of accounts. However, please note you can open these accounts with just one bank.
An excerpt from Kotak Mahindra Account opening form for NRI bank accounts.
Other features of PINS Bank Account:
- Only NRIs can open PINS account. Resident Indians cannot open such an account.
- The account can be used only to make trades in Indian equity markets.
- It is only applicable for equity investments and not for mutual fund investments.
How many bank, trading and demat accounts do NRIs need?
For resident Indians, you can do with a single savings bank account, trading account and a demat account. However, if you are an NRI, things are not so simple. There are various combinations possible based on source of funds (repatriable or non-repatriable) and nature of transaction (PINS or Non-PINS). So, it depends on your requirements.
- Your Bank Account can be PINS NRE or PINS NRO or Non-PINS NRE or Non-PINS NRO. Non-PINS accounts are regular NRE or NRO accounts.
- Your Trading Account can be NRE or NRO. You need separate trading accounts for PINS and Non-PINS transactions.
- Your Demat account can be NRE (repatriable) or NRO (non-repatriable). However, you need separate demat account for PINS and Non-PINS transactions. No permission is required from RBI to open a demat account.
Not all combinations are allowed. Only following combinations are allowed.
You can open all four combinations.
Please note the terminology may vary across banks, brokerages and depository participants. I have used this terminology to make it easier to understand.
You can notice NRIs cannot make fresh purchases under Non-PINS accounts. The only exception is issuance under IPO. However, IPO allocation is done by company i.e. shares are not purchased on exchange. For any fresh purchase in the secondary market, you need a PINS account.
Only those shares acquired under PINS scheme can be sold under PINS scheme. Therefore, shares acquired as a resident, allotted under IPO or received in gifts or as bonus cannot be sold under PINS scheme. Such shares have to be sold under Non-PINS account.
You can use your existing NRE or NRO savings accounts for linking to your Non-PINS trading accounts. However, for PINS trading account, you will have to open fresh savings banks account (PINS NRE savings account or PINS NRO savings account or both).
Non-PINS NRE and Non-PINS NRO savings account can be used to purchase mutual fund units and apply to IPOs. You do not need a demat account to hold mutual fund units. Shares received in an IPO shall be credited to Non-PINS demat account (NRE or NRO depending upon the source of funds).
What about the shares that I bought as a Resident?
You will have to intimate about the change in resident status to the concerned financial institution. You will have to open a new demat and trading account. The new trading and demat will reflect your NRI status and will be linked to your NRO savings account (Non-PINS NRO). All the securities held in your resident demat account will be transferred to the new demat account (Non-PINS NRO demat account). Such securities will be held on a non-repatriable basis.
What happens in case of a Bonus issue?
The bonus shares have to be transferred from PINS demat account to Non-PINS demat account. Such shares can only be sold from Non-PINS demat account. The sale proceeds will be credited to Non-PINS savings account (NRE or NRO).
Tax deduction at Source for NRI Investment in equities
Though the tax treatment for NRIs is same as resident Indians, there is difference in TDS rules for NRIs. Tax on long term capital gains on equity investments is Nil while short term capital gains are taxed at flat 15%. Entire tax liability will be deducted as TDS by your broker.
Please note you may be required to submit proof of date of acquisition and purchase cost with the broker in specific cases such as sale of bonus shares, shares allotted in IPOs etc. If you fail to submit the requisite proofs, TDS will be deducted on entire sales proceeds (and not just capital gains). You will have to claim the excess tax deducted while filing income tax returns.
I am an NRI. I want to invest. How to get started?
You need bank, trading and demat accounts. You need to submit following documents with the bank or brokerage firm:
- Copy of Passport
- Copy of Visa or local residency proof
- Address proof
- Photographs
- Copy of PAN Card
- Duly completed PINS application
- Duly completed application forms for opening bank, trading and demat accounts.
This is a tentative list. Exact set of documents can be checked with the respective banks or brokerage firms. Additional documents may be required based on your country of residence. Several banks provide an integrated offering where you can apply for bank, trading and demat accounts and PINS permission in a single application. Going with an integrated offering can save you a lot of compliance hassles.
PersonalFinancePlan Take
Indian equity markets present an opportunity to NRI investors. There are a few restrictions placed on NRIs. However, these restrictions should not deter NRIs from participating in Indian stock markets. Based on the source of funds and nature of transactions, NRIs need multiple bank, trading and demat accounts. As NRI are much sought after by financial institutions, this should not be a very tedious affair. To avoid unnecessary administrative costs, do understand the types of accounts you need and open only those accounts.
Source: RBI FAQs on Foreign Investments in India, FEMA regulations, 2000, Websites of various banks and trading portals
Useful Read
Book: In the Wonderland of Investments for NRIs by A.N.Shanbhag/Sandeep Shanbhag
Image credit: The original image and information about usage rights can be downloaded from Pixabay.
111 thoughts on “NRI Investment: How to start in stock markets?”
Is NRI Investment in non-repatriation basis still considered as a Domestic Transaction? Where is this mentioned?
Yes. You can refer to the following press release. http://pib.nic.in/newsite/printrelease.aspx?relid=121914
Alternatively, you can refer to DIPP policy Clause 10 (vi) http://dipp.nic.in/English/acts_rules/Press_Notes/pn12_2015.pdf
I am an NRI who has a joint Demat account with my late parent before I became an NRI. Could you tell me how I can convert that account into my name? Would this account be a PINS account or a non-PINS account?
Thank you.
For the process, I would suggest you check with the bank or DP.These are procedural requirements and may vary across banks.
It would be a Non-PINS account.
I am an NRI. Can I Purchase shares in IPO? If not, what is the other way.
Thank you.
Hi Mohammand,
You can purchase shares in IPO.
hello, sir iam anil here
isugess that any nri person give me my project investment, best opportunity come , so ur cont, me
my mail id – anil.jadhav78773@yahoo.com
Hello. Thank you for a very informative post. I had a question: I don’t fully understand the use of the non-PINS NRE account. The purpose in the table above says: “sale of securities received outside PINS on repatriable basis”.
What does this mean? I understand the non-PINS NRO demat account that the one where shares bought while I was a resident Indian are held, and the non-PINS NRO bank account where the proceeds from the sale of these shares will be credited to.
But what are the non-PINS NRE demat and bank accounts for? Is it ONLY for when I want to apply to IPOs in India using NRE funds? And if I want to sell these shares, do I need the PINS NRE account or can I do it through the non-PINS NRE account?
Please clarify, and thank you once again.
You are welcome, John.
Yes, IPO is one example. Other could be purchase of mutual funds units on repatriable basis (though there is no need to get MF units credited to any demat account)
Only securities purchased through PINS account can be sold through PINS account.
If applied to IPO through Non-PINS NRE, you can sell through Non-PINS NRE only.
I am NRI.I Have all four DMAT acc with ICICI. NRE PINS n Non PINS and NRO PINS and Non PINS.But All four PINS and Non PINS annual maintenance charges are very high. I am interested only in buying Mutual Funds. Pls suggest me should i buy MF through NRO or NRE acc? Also then is that any way to cancel PINS acc(both NRE n NRO) to reduce the annual charges since i have no interest in Direct Equity or secondary market? Witch non PINS should i Keep NRO or NRE?
If you want to invest on repatriable basis, then NRE-Non PINS or else NRO Non-PINS.
By the way, you do not need demat account to invest in mutual funds.
So, if you want to invest only in mutual funds, you can close all your demat accounts.
thanks a lot..
I am an NRI in UK working for an Indian company. My company offered me Indian RSU’s some years back.I want to exercise it now. Would exercising of RSU’s have to be done into PINS or NON PINS Demat account?
Dear Ranganathan,
Such shares will be credited to your Non PINS demat account.
I have NRE pins and non pins as well as NRO non pins for shares held as resident. Will bonus shares issued for those shares in NRo non pins come in that account or do I need pins NRO. Please advise.
Thanks.
Bonus shares for NRO Non PINS will come to Non PINS account only.
Sale of bonus shares cannot be made from PINS account.
Mr. Deepesh,
Your article was very informative. Thanks
Please guide me if you can,
I had open a ICICI bank 3-1 account. around 2007
NRE Bank a/c-1 linked with , NRE NON-PINS & Trading Account
NRE Bank a/c-2 linked with , NRE PINS & Trading Account
I have never done any tradings and I am only operating NRE bank a/c 1 for saving / transfer /withdrawals.
And have maintained very less balance with NRE bank a/c-2 from the beginning, eventually it was zero.
It was my ignorance (about PINS/ NON PINS) that I will use only one demat account and no need of other one.
Now I am interested in equity & MF. My NRE NON PINS is active but noticed my NRE PINS / trading account is CLOSED due to non payment of fee from few years & ICIC Bank informed that it cannot be activated and have to request for another 3-1 account.
What should I do, request another additional demat account with ICICI or close all active account with ICICI and approach other bank and start fresh?
Thanks Sameer.
There is no need to move to another bank. You can stick with ICICI.
Only trading account would have closed. Demat account will still be around.
You can request them to open a new trading account and link it to the existing demat account.
With banks, you must not engage with them over phone.
Many times, executives or even branch officials are not aware. Since there is no record and accountability, they do not think twice before saying anything.
Always drop e-mail to customer support explaining your case. You are likely to get a more accurate answer.
On a different note, I would suggest that you stay away from direct equities (unless of course you can spare time to research stocks).
If you want to take exposure to Indian equity markets, mutual funds may offer a simpler route.
Mr Deepesh,
your advice is very prompt and clear.
I will go by MF
Thank you very & Much appreciated
Regards,
You are welcome Sameer.
Good luck!!!
Mr Deepesh,
Thanks for this informative article.
I’m having PIN, Non- PIN NRE &NRO demat a/c with icici. But their brokerage and maintenance charges are very high. Please advise about some good broker deals with NRI with low brokerage and maintenance charges.Thanks.
Dear Pramod,
If charges are the only concern, you can open trading account with discount brokerages such as Zerodha.
Zerodha is much cheaper as compared to portals such as ICICI Direct. But that is for residents. For NRIs, they may have a different charge structure.
Contact them to find out about their offering.
Do note you may not find their user interface as intuitive.
Please understand this is not a recommendation for using Zerodha.
Disclosure: I use Zerodha for equity trading/investments.
Dear Deepesh,
Thank you for the informative write up. I have a OIS account with IDBI and holding some shares in it. The funds were transfered by NRE account. So when i sell those stocks, do i get the money in my NRE account? or it will loose the status of foreign funds? to be precise, my worry is if the funds came to my NRE account, then the interest earned will be tax free orelse i will have to pay tax on my interest.
Please advise
Thanks in advance
Regards
Radhakrishnan
I mean PIS account with IDBI….
Dear Radhakrishnan,
If the linked bank account is NRE account, then the money will come to NRE account.
There is a table in the post, which considers all possible scenarios.
Very Informative post. I have got few doubts.
Can a NRI have multiple PIS NRE A/c in one bank (as he is only allow to have PIS in one bank)? If not can he have multiple demat accounts linked to the one PIS?
I am asking this because i have observed NRIs having opted for multiple PMS from different AMCs. So they would be having different demat account for each PMS. In that case how the whole thing works?
Sir,
As per the recent amendment in FEMA regulation, NRI can open Non repatriable account using nro account for intraday trading.Currently I have NRE PINS account. If I open a new Regular account with my NRO account, is it possible to transfer my existing holdings (bought using PIS account) to new Non-Repatriable Demat account. (using DIS)? I don’t want to keep both accounts.
Thanking You
John.
Dear John,
I am not sure. Please check with the brokerage house.
Though transfer is not so much of a problem, there might be an reporting issue.
Dear Deepesh,
I need your advice. Let me explain my current situation first.
a) ICICI Direct: I have NRE NON-PINS acct with ICICI Direct, where I used to buy and sell Mutual Funds. At this moment I
have some mutual funds in this account.I DO NOT HAVE NRE-PINS Acct here to Buy-Sell STOCKS.
b) AXIS Direct: I have following accounts with AXIS.
AxisDirect Trading Account
NRE-NONPIS Bank Account
NRE-PIS Bank Account
NRE-NONPIS DP (DMAT) Account
NRE-PIS DP (DMAT) Account
As of today, I have NO MUTUAL FUNDS in AXIS bank, however I have FEW STOCKS in AXIS DMAT account.
I have chosen to quit AXIS Bank for personal reasons and open NRE PINS Acct in ICICI Direct (to Buy-Sell STOCKS).
I need to know following:
1) I do not wish to sell stocks from AXIS Bank, just to close the accts in AXIS. I wish to open DMAT acct in ICICI first,
Transfer the stocks from AXIS to ICICI, and then close AXIS accts. By following this way I do not have incur loss, which
would come if I sell the stocks now. Please let me know if this is possible.
2) If answer to questions no.1 above is YES, please let me know what is the procedure to be followed, to trasfer stocks
from AXIS to ICICI.
3) What kind of documents I need to collect from AXIS to produce to ICICI, in order to complete this process.
Plaese return with advice.
Thanking you in anticipation.
Sandeep K.
Dear Sandeep,
For operational matters, suggest you get in touch with ICICI only. You will get better guidance about process and documents required.
If you are transferring from one demat account to another, it won’t be considered sale. You remain the owner. Hence, there is no question of capital gain or loss.
Additional point to note. If you merely want to invest in mutual funds, you do not need a demat account.
Dear Deepesh,
Thank you very much for your response.
Sandeep K.
Dear Deepesh,
I am a merchant navy NRI. I checked pis scheme but the charges are so high and wit these many restrictions, I am planning to invest in my wife and son’s name. Will there be any tax implications. My wife is homemaker so she doesn’t has any income. Is gift tax applicable on NRI. If so how much is the limit so that I can avoid taxes
Dear Praveen,
Cannot comment upon charges. You can perhaps check with other brokerage houses or banks.
Investing in your wife’s or son’s name won’t reduce any hassles.
There is no issue in gifting money to your wife and son in India. Nothing to worry about on tax front.
You may need to check tax laws in your country of residence.
Thanks deepesh,
Charges are a hell lot unless until u invest lakhs of money.
I too reside in India and I don’t have any overseas residence.
My doubt got cleared reg tax front.
In 3 days I finishes all articles in your blog.
You are doing a great job. Continue your gud job so tat people get literate financially
You are welcome, Praveen.
Please do share the posts you like with friends and family.
Hi Deepesh,
Thank you so much for the detailed explanation. I do have a question though: Do i really need a Demat account to buy and sell MFs; Would i not be able to do it using just a non PINS NRO account?
Also would you know if most banks charge you separately for an NRE and NRO account or do they charge you just one fee for both NRO and NRE (PINS and non PINS) account?
Thanks a lot
Arnab
Hi Arnab,
Glad that you liked the post.
You are right. There is no need to open demat account to invest in mutual funds.
Infact, dont open demat account if all you want is to invest in mutual funds in India. Unnecessary hassles and cost.
You can invest through regular NRE and NRO bank account.You can get KYC done and link your NRE and NRO account with AMC accounts.
If you are interested investing in MFs, suggest you go through the following post.
http://www.personalfinanceplan.in/mutual-funds/how-can-nris-invest-in-mutual-funds-in-india/
KYC format has changed since then. Everything else works.
Charge structure may vary across banks. Suggest you draft a generic e-mail and drop to all the banks in your consideration set.
Thanks for the quick reply. As usual, you are right – over the weekend, i called up certain banks and they informed me their fee structure widely varies. I will try to find more about it and post it here.
You are welcome, Arnab.
Please do share your experience here. Other readers will also benefit from your inputs. Thanks!!!
I have NRO PIS account and a NRO account with the same bank.
How can I transfer money from the NRO PIS account to my NRO account
Also the same foe transfer from NRE PIS account to my NRE account
Thanks
I assume you are referring PIS and non-PIS bank accounts.
That shouldn’t be much of a problem Simple bank transfer should do.
Can I do NEFT transfer from my NRE PIS account in one bank to
NRE account in another bank. Both accounts are in my name.
Thanks
Yes. Suggest you go through the following FAQs of RBI.
https://rbi.org.in/Scripts/faqview.aspx?Id=60
Why don’t you check this with bank?
They will let you know if there are any regulatory or procedural hurdles.
I am an NRI. I have opened a NRE PIS(PINS) account with SBI to invest directly in stock market through SBICAPSEC. I have NRE savings account with SBI which is mapped with this NRE PIS(PINS) account. I do not have any NRO a/c with SBI.
Now, I want to invest Rs.25 Lakhs in KOTAK Mutual Fund AMC’S “PMS” with the amount kept in my NRO savings a/c with KOTAK Bank. I have both NRE & NRO savings a/c. with KOTAK Bank.
For this PMS, it is required to open a NRO PIS(PINS) account along with a trading and a demat a/c separately with Kotak group.
Is it possible(legal) to maintain two PIS(PINS) account: one for NRE account in SBI(for normal stock-buy and sell) and another for NRO account in KOTAK bank(for PMS)? Or as per RBI guideline we have to have both the PINS(NRE & NRO) account with a single bank only? Is there any separate rules for PMS? When I contacted them,they replied “If the customer has a NRE PINS account with any bank, he can open a NRO PINS account also with any bank of his choice”.
I want to confirm it from you whether it is true or not. Please mention the RBI link which supports your judgement.
I want your expert opinion about this matter. Please advice as per the RBI rules.
Dear Amrit,
At the outset, I want to clarify I am not in expert in FEMA. You are advised to consult an expert before you make any decision.
I based my argument based on following circular and the date available on many bank websites.
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=174&Mode=0#sch3
You can refer to Schedule 3. You have to designate a bank branch for PIS.
However, if AMC has made the aforesaid statement in writing, there must be some reasoning behind it.
If you have been told over phone, don’t trust.
You can ask them for further clarification. You can also drop an e-mail to your bank.
Request you to update me about their replies.
Other readers will also benefit from your findings.
Dear Deepesh,
I should first thank you for providing such a platform where individual investors can upgrade their knowledge. Financial knowledge is very very tricky and that is the reason most of our Indian brother and sisters prefer simple F.D and avoid such vehicles where even Bank and mutual fund branch managers doesn’t know the rules. How many investors are there who can personally investigate what is true and what not. Most of us just sign the papers and think others will take care of everything. I have signed my PMS application before I return to abroad. After coming, while searching about PMS, I am finding such issues of PINS account.
Now, coming to the point, whatever doubt was there in my mind is not clear from your above link. In Schedule 3, nowhere it is written about whether an NRI can open PINS(PIS) account in two different bank or not. In your above article you have written, “Depending upon your requirements, you can open a NRE PINS or a NRO PINS or both types of accounts. However, please note you can open these accounts with just one bank”. When I asked AMC personal, they have replied,”“If the customer has a NRE PINS account with any bank, he can open a NRO PINS account also with any bank of his choice”. Both are contradictory. Now, I asked you as well as AMC personal to provide RBI Link(FEMA Link) to proof your statement. See, it can not be a view of mine or your’s or somebody else’s. There must be some authentic Govt link to support your statement. Please provide the link where from you got your views that only one bank can open PINS A/c. You are in the financial market and have a vast community where you can collect the data. Similarly I have requested to them to provide a link in support of their views. This will help so many of your readers.
Thanks once again.
Thanks Amrit!!!
What I sent you was a link on FEMA regulations on RBI website. So, it is as authentic as it gets.
However, regulations can be subject to interpretation.
In my opinion, you can have PINS account with just one bank.
Bank websites mention the same. You can check on Kotak and ICICI Bank websites too.
However, since the AMC is saying otherwise, you can share the link with them and seek clarification.
You can directly write to RBI. I am not sure if you will get the reply though.
Thanks Deepesh,
I have already written to RBI. If I get any clarification either from RBI or AMC, I will share to you through this forum. But if I do not get any clarification from RBI, I will prefer to stop this PMS and would like to invest in DIRECT Mutual fund through STP. Thanks for taking pain to reply personally to all queries. It’s a great job you are doing. All the best.
You are welcome!!!
Sure. Please update your findings on this forum too. I, along with many other readers, will benefit too.
Thanks!!!
Hi Mr. Deepesh,
Can a NRI having a normal savings bank account and Dmat, do share trading in equities?
Of course not even for once, I had repatriated money from India to abroad and not going to do so.
Just want to avoid paying higher brokerage and PINS with NRE account for trading puropose.
Regards,
P Saha
Dear Mr. Saha,
You must go through PINS scheme.
I have two NRE demat accounts. One is a joint account with my wife
and one is me single.
Also I have one NRE PIS account single, me only.
With one NRE Trading account will I be able to trade in shares from
the two demat accounts, or will I have to open two Trading accounts,
one for each demat account.
Any feedback will be appreciated.
Thanks & Regards
Anthony Fernandes
Technically, you can trade from two trading accounts and use just one demat account.
Practically, there are a host of issues.
Suggest you talk to your brokerage firm.
Dear Deepesh
One of my relative purchased numerous shares as resident in 1990s. All are in physical form. Some of the companies might have closed down or merged/demerged. Never had any demat account. Being an NRI never purchased any shares.
Please advise way forward.
Dear Parveen,
Those physical shares will have to be dematerialized.
Shouldn’t be much of a problem unless there are KYC issues.
Suggest you talk to a good broker. Will guide you about the process.
Suggest you go through following link on ICICIDirect website.
http://content.icicidirect.com/nriregfaq.asp
Search for “Dematerialization process”
I came to know that RBI has now amended FEMA regulations which now allow NRI’s to invest in Equity markets on non-repatriation basis just like resident individuals. Is it true ? If i have NRO account can i open NON pins trading account ?
I am not very sure about this. I will have to check.
Did you talk to your bank about this?
The idea was in the offing after cabinet nod. I will have to check how it has been operationalized.
NRO-Non PINS was always allowed. Just that you could not make any purchases.
Hi, Please find the below article which say “NRI with NRO Account can trade in Equity Delivery as normal resident Indian.”
Please confirm if this is true?
http://www.topsharebrokers.com/article/nri_trading_in_india/35/
Hi Deepesh,
I already had Demat Account in ICICI Savings account (Not NRE Account). I have NRE Account in TamilNadu Mercantile Bank. Can I use Old demat account to buy shares and Mutual funds or I need to open New Demat account?
Dear Arun,
I assume you are a non-resident now.
In my opinion, you need to open new demat account.
Please verify this with your broker.
Yes. I am Non-resident now. Thanks for your reply. I’ll check and if i have any queries then i will communicate you.
i am an NRI. Want to trade in secondary market and IPO/ Mutual Fund etc. I don’t want to repatriate any thing and will transfer fund from NRE to NRO account. Should i just open PIN NRO and NON PIN NRO ? will that be sufficient?
Further what happens when you become Resident again? you need to close all the accounts or they can get converted to normal demat a/c
Yes, if you do not want to repatriate.
Hello Deepesh,
few years back I moved to USA in deputation and because of my long stay, I’m NRI now. Before I came to USA, I had account w/ HDFC bank ( Demat & Mutual fund, which is active today. I have also shares and MFs in it. I have not done transaction since I came to USA. Now I’m planning to do long term investments in Indian equity and MF market. Request your valuable answer for below Qs.
1. What account I should convert my current account to (NRE/NRO)?
2. I understand there is 15% tax on short term capital gain(tax only on int.), but what does mean by “Entire tax liability will be deducted as TDS by your broker”? Does it mean tax on source of investment as well?
3. What’s intraday trading?
4. Do I need to file tax return in India for my dividends / returns?
Thanks in Advance!
Hi Nilu,
1. NRO
2. only on capital gains. Principal won’t be taxed.
3. You buy and sell on the same day.
4. You can choose not filing returns in specific cases. Suggest you approach a chartered accountant for more on this.
You are the best!! Swift and crispy reply..
You are welcome, Nilu.
Dear
I am NRI . I would like to buy equity shares from secondary market . Do I need PINs account or is it possible with non-pins a/c
You require PINS account.
Hi Deepesh
I am a NRI and i have a NRE PINS account only I did not open a non PINS account. What will happen to Bonus share that I receive in future ? Since bonus shares are not dealt with PINS account. I have also applied new IPO without having a non PINS account and these equities shows in my dmat accout with PINS account, whats your view on this ? thank you
Hello,
I have demate account in india, and holding equity shares from last 20 years in it. Now i become NRI, so what shall i do with my existing shares ? If i want to sell in future what will be the procedure i need to follow ? And, in future i am thinking to brought that all money to outside of india, so how can i do that ?
Request to guide me in detail.
Thanks
Nick
Check with your bank or brokerage firm. They will guide you better.
Dear Deepesh,
Could you please advise me on this query.I am a NRI and my query is regarding investment in Mutual funds. I have 4 accounts linked to my single customer ID in ICICI bank. (NRE PINS, NRE NONPINS, NRO PINS and NRO NONPINS trading account each linked to its own savings account). As per ICICI Direct, MF investment can be done only through funds in NRE NONPINS account. Similarly, investment in secondary market stocks can be done only through funds in NRE PINS account. Now I want to invest in MFs through a different advisor via the NSE MF platform. Can I invest through my NRE account linked to NRE PINS trading account? Or should I invest only through the NRE account linked to NRE NONPINS account? Am I flouting any laws by investing in MFs through the NRE PINS account? Please clarify. Thanks
Dear Sham,
You do not need a demat or trading account to invest in mutual funds.
If you are investing through an advisor in NRE MF platform, you will get access to the platform.
Your ICICIDirect account does not come into picture.
Do explore direct plans of MF schemes. You will save a lot on commissions.
Thanks very much Deepesh. Just to clarify on my previous query, You meant I can still pay from my NRE PINS savings account for my MFs through NSE platform? Regards
As I understand, you can’t purchase MF units through NRE PINS bank ccount.
Please check this with your bank too.
Hi, I have nro/nre – pins and non-pins account with ICICI, now I have opened nri/nro account with HDFC – and they have taken my request to apply for Demat/pins and non pin account. can I maintain with both banks or not. or HDFC processed request will be rejected please advise.
You can have PINS account with just one bank.
Not sure if HDFC will reject your request but you must ensure that you have just 1 account.
Hi Deepesh! Wonderful information on your website. Thanks for your service. I am sure you are helping a lot of people make there way through the complex world of govt financial bureaucracy and rules.
Can I pick your brain a little bit? My question is, it’s very clear through the rbi circular that investments through non repatriated route is considered a domestic investment, so,in that case if I merely change my regular resident savings account which is linked to my current trading a/c to a Nro account(Non pins), will it be all? Do I need to inform broker or my DP or anyone else?
Thanks Rajesh!!!
This aspect is operational and ever so confusing.
Suggest you confirm this with the bank/broker. PINS seems a safer choice.
Can a NRI do intraday trading in NON PIS NRO Account.
Hi Deepesh,
Can an NRE PIS account be linked to multiple trading and demat accounts. I am tempted to experience the service of Zerodha vis-a-vis full service brokergae like Geojt BNP Paribas. Please advise.
Hi Mahesh,
I am not very sure. Think you can do it.
Better to check this with the brokerages.
Btw, charges for NRIs at Zerodha are different (than those for residents)
Dear Deepesh
I am an NRI since 1990 and have NRE and ordinary accounts since then. Now am 63 years old and retired since 2012 due to health problem and have no foreign income since then however still leaving in UAE.
My father bought few shares through IPO and from secondary market during 1990 to 1994 from ordinary and NRE accounts. Thereafter due to sad demise of my father in 1994 I got his part of shares transferred in my name in 1995. Since then I did not do any transactions in shares which were all demated. But in 2016 I sold and bought some shares from that amount worth Rs. 2 Lakhs which were all held very long term. My income in India is under no tax bracket in any year even considering domestic status. I still have no NRO or any PINS account but have still NRE and ordinary accounts and all dividends are being credited in my ornery accounts. I have never repatriated any amount or made any internal transfer from my NRE account.
My questions are :-
a) How to regularise my normal account in which I am holding shares and MF since 1990 noting that I am an NRI but am retired since 2012.
b)Can I opt to cancel my NRI status, close my NRE account and transfer money in my regular account and then continue trading in Stocks and pay taxes like ordinary person even though I live in UAE as retired person.
Request your reply to the above
Thanks and regards
AJJ
Dear Sir,
1. Please talk to your broker. He will guide you better. You do not need a PINS account if you do not want to purchase further shares.
2. As I understand, you can’t cancel NRI status.
Dear sir,
Can you kindly advise me in the following subject..
1. I am working in Muscat-Oman for last 8 years
My vacation status is 2 months in every 2 years.
I have NRE account with SBI
2. Can I invest a small Amount in share market(say below 1 lakh) in my Wife’s name(housewife, no income)who is living in India only. By transferring this money from my NRE account to her saving account , and then demat account.
3a. If yes, who will be tax payor.? (me or wife ?)
3b. If no, Please advise which is best possible way to do it
( As I am Working abroad, and difficult to come to India & follow up the tax matters every year, i would like to open it in my wife’s name)
4. Kindly advise…
Thanks in advance
Gob Bless…
Ajith, Muscat-Oman
Dear Ajith,
Even if you invest in your spouse’s name, clubbing provisions will apply and any income from such investments will be clubbed with your income.
Suggest you go through the following post.
http://www.personalfinanceplan.in/taxes/pfp-primer-clubbing-of-income/
Suggest you also talk to a Chartered Accountant about this.
Hello sir,
I am an NRI. Could please suggest us there any option to overcome the high brokerage charges/taxes on NRI stock marketing, IF I use NRO-non-reparte account? Will it be similar to one resident who trades in India with his normal SB account?
Apologies if any terms are not up to the marks/ I’m a beginner.
Hi Praveen,
All brokerages charge more to the NRIs (as compared to residents). You can try out discount brokerage such as Zerodha.
Once everything is set up, it should not be a problem.
No worries. Everyone was a beginner at some point of time.
Good luck!!!
Hi Deepesh,
I’m living in the US for past 5 years and just apply to IPOs through my earlier trading a/c with ICICI.
I want to buy stocks in secondary market too. I understand by your blog that i should have a PINS a/c set up.
Can you guide me how this can be done while living in US. Which bank NRE/NEO and trading a/c can be opened easily from here in US.
I spoke with ICICI Direct for converting my normal trading a/c into an NRI trading a/c and they said that i would have to visit their branch in India personally and submit all documents and verify personally in the branch.
How can a person visit India just for opening an a/c, why can’t it be done from here.
Thanks
Sandy
Dear Sandeep,
These are operational aspects. Please talk to the concerned bank/brokerage house.
I am not the right person.
Yes, sounds crazy.
Customer care executives or branch officials typically do not know much.
Drop an e-mail to customer care and seek response. If possible, mark someone in the senior management. You will receive the correct response.
Hi Deepesh,
I am an NRI having NRO PINS and NRO NONPINS account with icici direct. Recently HDFC approached me stating that I can open a NRE PINS account with them and they told me its completely ok to have one NRE PINS and one NRO PINS account in separate banks . They have also opened a NRE PINS account for me.
I still doubt whether its fine to have my NRE PINS and NRO PINS accounts with 2 separate banks. I tried searching the net to find any official document on this issue but was not able to locate anything, It will be really great if you can help me on this
Hi Dhawan,
In my opinion, you can’t. Please understand my knowledge of these matters is fairly limited.
If HDFC had their way, there is no problem in you having 100 PINS account. For them, it is sales.
Write mail to them and seek clarification over e-mail.
Dear Sir,,
I am holding 3 in 1 demat account.
I had 20 shares of WIPRO in my PINS account..
Now due to corporate action 1:1 bonus share were declared..
I got SMS but did not get any shares in my account.
How long will it take to credit into my account?
Also how to transfer the bonus shares from PINS to NONPINS?
Is it possible to sell the bonus shares from PINS account.
Pius
Please talk to the brokerage house.
Can students at us having demat account sell his old shares and buy new shares in the same account for long term
Need to open PIS account.
Thank you, your article has explained many things. Really appreciated.
The one thing which comes to mind (provided one has all the 4 combinations in your article), is that there any need for a PINS NRO trading/PINS NRO bank account provided there is no income being generated in India?
For PINS investments it is better to use NRE as money remains repatriable.
So PINS NRO has no role really, unless one wants to use money from income in India to invest in PINS (equity shares)
If there is no need, you don’t need to open.
Dear Mr.Deepesh,
I tried to purchase shares of Infosys today using my demat account linked to NRO via Icicidirect for very first time as a beginner.
It mentioned”pls slect your PINS account to purschase”….How to open PINS account in existing ICICIdirerc account.
Pls assist.
Open PINS account. Contact ICICIDirect. They will guide you.
Hi Deepesh,
One of my NRI relatives is having joint resident trading and demat account with his mother in resident category ever since he was resident Indian. Do he need to close the account now since he shifted abroad and his status changed NRI or it can continue in same capacity. Funds sources for the shares purchased in the account are from pension proceeds of his mother who is still resident India.
We tried searching the related information but was not able to locate, please help clarifying our doubt.
Hi Rajesh,
In my opinion, yes (especially if he is the first holder).
Please check with the brokerage house.
Query: I want to buy and sell shares only through NRO account on non-repatriable basis ? I already have some existing holding which I believe will move to NRO – NON PINS account.
Now, for any new investment can it be done via NRO-NON PIns account only ? so that I just maintain one kind of account – given tehat recently govt has mentioned that there for funds on non-repatriable basis — the investments are considered domestic.
If you want to transact in secondary market, you need a NRO-PINS account.
Nice and clear article
Thanks Deepesh !
can you give more insight about Debt investment
Thanks Gunjan!!!
What kind of debt investments you are referring to?
Hello Sir!
very nice article, someone wants to know more about NRI & FPI Investment Visit here- https://arihantcapital.com/products-services/nri-fpi-investment
As I NRI customer investing in MF every month. may I know how much TDS will deducted when redeem time? any other charges are there?
Hi Sridhar,
TDS is applicable on gains.
No other charges.
Please refer to this post.
https://www.personalfinanceplan.in/nri-mutual-fund-taxation-tds/
Hello Deepesh,
Quite nice document, but is this still upto date?.
Reason for asking Can NRI buy/sell shares using NRO non pins account? And Is money repatriable in NRO non pins account once we pay all kind of taxes to Gov? Or its HARD STOP money CAN NOT be repatriable as account is non pin NRO Account.
Best Regards,
Mohit