Can NRIs maintain a domestic trading and demat account?

Posted by:
Updated: Saturday, May 11, 2013, 9:41 [IST]
 
Share this on your social network:
   Facebook Twitter Google+    Comments Mail

 Can NRIs maintain a domestic trading and demat account?

If you have lost your resident status, which means if you have now become a non resident Indian, and have had a domestic trading and demat account, you are not entitled to trade and take delivery of shares from that account.

This means that you may have to close the account or change the status. Remember, that as an NRI you cannot trade in shares on an intra day basis, like domestic residents. Continuing to use the account as resident individual, after becoming an NRI is not legal.

Procedures are different

NRIs must have a Portfolio Investment Scheme (PINS), which is mandatory as per the Reserve Bank of India (RBI) under which the 'Non Resident Indians and 'Person of Indian Origin can purchase and sell shares by routing all such purchase/sale transactions through their account held with a designated Bank Branch. The designated Bank maintains a record of all investments done under PINS (PINS portfolio). So, you may need to open a demat account, a trading account and a PINS for buying and selling shares in India, as an NRI.

Intra day trading not permitted

Non resident Indians are not allowed to trade on an intra-day basis. This means that you cannot buy a share and squareoff your position by selling the share on the same day, like a resident Indian. If you buy, you have to wait to take delivery of the shares (normally done on the third day) and then can sell it on the fourth day, if you wish to.

Also read: Which account should NRIs remit money? NRE or NRO?

How do you know if you are an NRI?

A NRI as per India's Foreign Exchange Management Act 1999 (FEMA), is an Indian citizen or Foreign National of Indian Origin resident outside India for purposes of employment, carrying on business or vocation in circumstances as would indicate an intention to stay outside India for an indefinite period. An individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year.

GoodReturns.in

Topics: nri, demat account
Story first published:  Saturday, May 11, 2013, 9:01 [IST]
Write Comments

Please read our comments policy before posting

Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'
Goodreturns iPad App
Goodreturns iPad App
Download GoodReturns iPad App and enjoy it. Learn more about Oneindia GoodReturns on the App Store.
Download Goodreturns iPad App