NRI Demat Account Opening Process

In India, both resident Indians and non-resident Indians (NRIs) can hold a demat account to trade in equity. However, if an NRI wants to open a demat account, they have to follow the rules of the FEMA (Foreign Exchange Management Act). An NRI can open both  Repatriable and Non- Repatriable demat accounts. 

For a Non-Resident Indian NRI to trade in secondary markets, they can operate a demat account only post seeking Portfolio Investment Scheme (PIS) licences from designated banks to make investments in India.

As per the Reserve Bank of India (RBI), an NRI can only hold up to 5% of paid-up capital in an Indian company. An NRI can invest in Initial Public Offers (IPOs) on a repatriable basis using NRE demat. If the NRI invests on a non-repatriable basis, then the NRO account and NRO demat will be used.

However, suppose an individual has a demat account before gaining the status of NRI. In that case, they can convert it into the NRO category to trade after leaving the country or open a new account. Also, the existing brokerage firm will transfer the shares previously owned to the new NRO holding account.