Investors often ask if they can trade in Indian shares say from the US or UK using an Indian Trading and Demat account.
You have to open a Portfolio Investment Scheme (PIS) account and also another demat and trading account. If you continue to trade using your existing domestic account inspite of being a Non Resident Indian (NRI), then it is a violation of the law.
However, on the other hand if you are not a foreign citizen or NRI and a domestic citizen gone abroad on assignments or a tour, there is no harm in trading or investing.
Many individuals go on a short stay for a number of reasons and its perfectly alright to trade.
PIS Is A Must For NRIs
As per Reserve Bank of India guidelines, a Portfolio Investment Scheme is a must for Non Resident Indians (NRIs).
All sale and purchase transactions for NRIs and PIOs have to be routed through the PIS. What this means is that if you are an NRI or PIO and not following the above guidelines, it is a clear violation.
Many of the Indian banks including those in the private and public sector have branches abroad, which can help you open a trading, demat and PIS account.
These PIS accounts help you to buy and sell shares. Trading is not allowed by NRIs. You can open a a Portfolio Investment Scheme Account under NRE or NRO account.
You must intimate your broker when your residency status has changed from domestic to NRI.