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What Precautions Shares Brokers Need to Take for Dealing with NRI Clients?
The rules for NRIs dealing in shares is very different to that of domestic investors. Once the NRI PIS and Trading Account is opened, brokers need to take precaution to ensure that there is compliance from NRIs and they are in tune with most of the rules and regulations.
1) Brokers should ensure that the shares being purchased by the NRI are not in the RBI banned list.
2) Funds available in the account are clear and no purchases are made otherwise.
3) Unlike domestic investors an NRI cannot sell securities that are not in his DP account. The broker has to ensure the same.
4) Depending upon whether the purchases are made on repatriation/
non-repatriation basis pay-out of the securities needs to be transferred to respective demat account.
5) Purchase/Sale transactions in cash segment should be settled by delivery only.
Conclusion
Abundant caution must be exercised before a transaction has been executed. There has to be regular scrutiny by brokers to ensure that there is a compliance.
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