Investing in the Indian stock market is exceptionally rewarding for NRI’s. The country’s stock market is the third-largest investor base in the world after the USA and Japan. So, if you are an NRI and want to invest in stocks, you can start investing in the Indian stock market. You need to follow certain guidelines and processes before investing in the stock market.
Pre-Requisites For NRI Trading In India
- First, you need to open a Non-Resident External Rupee (NRE) or a Non-Resident Ordinary Rupee (NRO) savings account in India. Once you open a savings account, you can start with the transactions. You can also open a Foreign Currency Non-Residential (FCNR) savings account, but the money will remain in foreign currency.
- Second, you need to get approval from the RBI. Once you have opened your savings account, you need to collect a permission letter from the RBI. Make sure to get the letter before opening a Demat and trading account.
- Third, you need to collect a Portfolio Investment Scheme (PIS) letter. The PIS letter will be provided by the bank where you hold your savings account.
- Fourth, you need to open a Demat and trading account with a reputed brokerage firm in India. You can choose any brokerage firm, but you will be required to submit all the documents along with the PIS letter provided by your bank.
Documents Required To Open An NRI Trading Account
• PAN Card
• PIS Letter
• FEMA Declaration Letter
• FATCA Declaration Form
• Address Proof (Overseas utility bills/passport/driver’s license)
• Address proof in India
• Bank Account proof
• PO Box declaration in the country of residence
• Passport and Visa (in case of an Indian passport)
• Passport and PIO copy (in case of foreign passport)
Process Of Trading For NRI’s In India
NRI’s can trade in India by following the below process:
- You need to allocate the required funds from your savings account (NRE/NRO) to your PIS account. Once the bank updates your NRI trading account fund, you can start trading.
- You can buy from the list of stocks available for NRI traders. At the end of the trading day, your stockbroker will send a contract to the bank. The bank
- would then debit from your PIS account.
- When you sell your stocks, your stockbroker will send a contract note to the bank. The bank would then credit the amount (profits gained from selling your stocks) to your PIS account.
Note: You must have a trading account to sell your stocks. So, if you have only a Demat account you can buy shares, but you cannot sell them. So open a Demat and Trading account both.
Investing in the Indian stock market can be a lifetime opportunity considering the growth in the financial market. Also, with many online stockbrokers allowing hassle-free, minimum documentation facilities, it is easy to open an NRI Demat account. Get started with Choice Broking financial advisory service for online NRI account opening today.
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