Posted on 15th Sep 2016
by TopShareBrokers Team
Are you a NRI and want to play in Indian Stock Market but don't know how. Don't worry because here in this article you will get all the information to begin your journey as NRI Trader. To know about NRI Trading in detail, let's go step by step and learn who is NRI, what is NRI trading, types of Accounts NRI can open, Brokers that offer NRI Trading services in India and what all goes in to NRI Trading.
With the recent amendment in FEMA regulation, NRIs can now invest in Equity Market like resident individuals. Earlier NRIs were allowed to invest in Equity market through a PIS account only. Now PIS account is required only if you have NRE Account by which you can repatriate (take out the funds out of the country) the sale proceeds.
NRI with NRO Account can trade in Equity Delivery as normal resident Indian.You just need to open a normal trading and demat account and link it with your NRO Saving Account.
NRI is no longer required to open PIS Bank Account for investment in Indian stock market without repatriation benefits.
Yes, With RBI Circular on 2nd Feb 2017, NRIs access to the exchange traded currency derivatives(ETCD) market to hedge currency risk arising out of their investments in India. With this change NRIs may take positions in the currency futures/exchange traded options market.
For More detail please contact your broker.
NRI or Non Resident Indian is a person residing outside India who is an Indian citizen and holding Indian passport. The purpose of staying outside India for an uncertain time period can be employment, business, education, training etc.
Person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan, if he at any time held Indian passport; or he or either of his parents or any of his grandparents was a citizen of India; or the person is a spouse of an Indian citizen. Investment by PIO in Indian Securities is treated the same as the investment by non-resident Indians NRIs and requires same approvals and enjoys the same exemptions.
NRE Bank Account is Non Resident External Account. Since it is an external account, any money lying in NRE account can be remitted outside the country which means the money is fully repatriable. Also money can be freely transferred from NRE to NRO Account. It can be a saving or current account. With this account, NRI has to go through PIS route to trade in Indian Stock Market.
NRO Bank Account is Non Resident ordinary Account. With NRO Account you have restricted repatriation of 1 million USD per annum. Also money cannot be transferred from NRO Account to NRE Account. NRI with NRO saving account is no longer required to open PIS Bank Account for investment in Indian stock market.
|NRE Saving Account||NRO Saving Account|
|Account Type||NRE account can be a Saving Account or Current Account||NRO Account can be a Saving or Current Account|
|Average Monthly Balance in Account||Rs 10,000||Rs 10,000|
|Repatriation||Principal and Interest earn is fully repatriable||Restricted or partially repatriable (upto $ 1 million in a financial year)|
|Taxation||NRE Account is tax free||Interest earn and credit balance has tax liability|
|Earnings in India||Any type of earning in India cannot be deposited in NRE Account||Earnings in India can be deposited in NRO Account|
|Joint Account||NRE Account can only be jointly open with NRE only||Can be open jointly with NRI or close relative in India|
Portfolio Investment Scheme PIS is the scheme of RBI through which NRIs and PIOs can purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange in India by routing all their transactions through a designated bank branch on repatriation benefit basis.
There are few branches of some Banks that are designated by RBI that a NRI can have account with in order to invest in Indian Share Market.
Non Resident Portfolio Investment Scheme Account is called NRI PIS Bank Account. Any NRI or PIO holder wishing to invest in Indian Share Market on repatriation benefit basis must have PIS Account with one designated Bank in India. It is meant for investing in Indian Share Market delivery based buy and sell transaction. Now with the new RBI circular, you only need PIS letter if you want to map NRE account with trading account. That would be called NRE PIS Account. However, for NRO account you are not required to get PIS letter and you can map your NRO Account to Trading account with any Broker as normal.
There are Financial Institutions in India who provide Bank, Trading and demat Account for NRIs all under one roof. They are called 3- in- 1 NRI service providers. They serve as Ban, Broker and DP all in one.
The Broker who provides Saving Bank Account, Trading Account and Demat Account all in one for seamless transactions.
Kotak securities offer all three accounts for NRIs i.e. Saving bank Account, Demat Account and Trading Account named as Trinity Account. Kotak Mahindra bank is a designated bank for issuing PIS.
ICICI's 3-in-1 integrated account enables you to tie in your savings bank, demat and brokerage accounts electronically and seamlessly. You can invest in equities, derivatives (F&O), mutual funds, IPOs, ETFs through your ICICI NRI account.
|ICICI Total Turnover (per month)||ICICI NRI Brokerage|
|Above Rs 50 lakhs||0.50%|
|Rs 25 lakhs to Rs 50 lakhs||0.75%|
|Rs 10 lakhs to Rs 25 lakhs||0.90%|
|Rs 5 lakhs to Rs 10 lakhs||1.00%|
|Up to Rs 5 lakhs||1.25%|
|Total Turnover (per month)||ICICI NRI Brokerage|
|Above Rs 20 Crores||0.03%|
|Rs 10 Crores to Rs 20 Crores||0.035%|
|Rs 5 Crores to Rs 10 Crores||0.04%|
|Up to Rs 5 Crores||0.05%|
|Total Turnover (per month)||Per Lot Brokerage|
|Above Rs 20 Lakhs||Rs 70|
|Rs 10 Lakhs to Rs 20 Lakhs||Rs 75|
|Rs 5 Lakhs to Rs 10 Lakhs||Rs 85|
|Less than 5 lakhs||Rs 95|
HDFC offers 3-in-1 account for NRIs to invest in India. This account combines banking, broking and demat account which makes your equity trading seamless and hassle-free.
AxisDirect, the online trading portal of Axis Securities Limited, a 100% subsidiary of Axis Bank offers3-in-1 account integrating bank, demat and trading account seamlessly enabling hassle free transactions.
Invest in Equities, Initial Public Offerings, ETFs, Mutual Funds and Futures & Options with AxisDirect NRI trading account.
This means the Broker offers Trading and Demat Account and you have to link the NRE or NRO Account open externally through Bank to your trading Account.
Sharekhan provides NRI Investment Services having tie up with HDFC Bank for RBI approved NRE or NRO Bank Account.
The Broker who provides Trading Account and Demat Account with discount/Flat fee brokerage for NRI's.
Simply leave your contact information with us and ProStocks representatives will call you.
Simply leave your contact information with us and Zerodha representatives will call you.
TradePlus NRI Account enables you to invest and Trade in Equities and Derivatives listed on NSE and BSE. You can also invest online in Mutual Funds and IPOs using this Account. They have tied up with HDFC Bank, Axis Bank and Yes Bank.
Upstox, the 2nd largest discount broker by number of clients started offering NRI Trading and Demat account services since Jan 2016.
NRI can do delivery based buy and sell transaction with NRI-NRE trading account linked with your NRI PIS Bank Account. Please note that NRIs are not allowed to do non delivery trades in cash segment (equity segment). Trading in equity derivatives and currency derivative is also not allowed through NRI- NRE Trading account.
Stock holding of an NRI can't exceed 10% in any Indian listed company subject to overall limit for listed equity shares of each company on repatriation benefit basis. Here is the list and limit on stock holding by NRI.
This the list of general documents required by any broker. The list may vary depending upon your broker.
NRI is no longer required to open PIS Bank Account for investment in Indian stock market without repatriation benefits. NRI are on par with resident Indian for all investment in listed equity shares on Indian stocks exchanges without repatriation benefits which means NRI investing through NRO Account are not required PIS Account. Any existing NRO PIS Account will be converted to NRO Saving Bank Account post amendment in FEMA in Feb 2016.
NRI investment in equity shares of listed company without repatriation benefit is treated at par with resident Indian and there is no upper limit. Please refer the recent amendment in FEMA on RBI website at following link1 and link2
If you intent to trade in Equity Derivatives Segment, you have to come through the custodial route. You will need to open NRO Custody Account. Brokers like Zerodha and ProStocks offer NRO Custody account from ISSL, which is IL&FS Group Company. Your settlement obligation for trades in Equity Derivatives Segment will be done by ISSL from your custody account. ISSL charges custody account management charges and you need to do KYC with ISSL also. Your Broker will assist you in opening your custody account with ISSL. ISSL will permit custody account with assets not less than USD 5000.
To open a Custody Account you need to complete certain documents:
You can request your Bank to close your PIS Account and move to non-PIS way. In such case you need to contact your bank and send broker a revocation letter and closure of PIS acknowledgement copy.
NRO Trading Account is subject to applicable withholding tax. This withholding tax is known as Tax Deducted at Source. Your broker need to deduct withholding tax and deposit to Tax Department, for that brokers need to take external service of Chartered Accountant.
Banks have authority to redesignate such accounts as resident accounts on return of the account holder to India. When you convert your account in resident account, you will get interest till last date.
As per the latest RBI circular, if you have a NRO (non-repatriable) bank account, you can map that to the trading account and it will be like a normal resident account.
Your Broker will calculate the tax with the help of a CA and deduction will be done by the Bank where you are holding the NRI Account.
Axis Bank, HDFC Bank, Yes bank, SBI Bank, ICICI Bank, Indusind Bank.
Unlike resident accounts, there is a huge manual process supporting NRI clients. There is incremental efforts involved in all NRI trades including updating balances, reporting contract notes, reconciling receipt/transfer of funds etc and hence the higher charge.
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