Best Demat Account for NRI

Non-resident Indians (NRIs) who are far from home still aspire to invest in India's thriving economy. According to a report by the Economic Times, 53% of NRIs believe India offers better ROI opportunities than other countries!

Whether you are chasing your dreams in Dubai, building a life in London, or soaking up the sun in Singapore, a part of your heart (and possibly even your wallet) still belongs to India. 
And why not? The Indian economy is on fire, with exciting opportunities in everything from fintech startups to seasoned infrastructure projects. 
But as an NRI, it can be tricky to figure out how to invest without dealing with lots of confusing rules and paperwork.

That's where we come in. In this blog, we'll guide you on how to open a Demat account and invest in the stock market as an NRI, as well as provide you with information on the required documents and the best Demat accounts available.

Table of Contents

- Who is considered a Non-Resident Indian?
- Best Demat account for NRI
- NRI Demat Account Charges
- Documents required to open NRI Demat account

Who is considered a Non-Resident Indian?

A person is considered an NRI if they meet specific criteria set by the Indian government. Primarily, there are two ways to qualify:

1. Physical presence: An individual with Indian citizenship who spends less than 182 days in India during a financial year (1 April to 31 March) is considered an NRI. This applies regardless of their reason for being abroad, whether it's employment, education, or personal reasons.
2. The intention of stay: Even if someone stays in India for more than 182 days, they can be classified as an NRI if their intention is to stay abroad for an indefinite period. This often applies to individuals who have taken up long-term employment or established permanent residency outside India.

As an NRI, having a Demat account is essential if you want to invest in the Indian stock market or hold Indian securities.

A Demat account works like a bank account, but instead of holding money, it holds your stocks, bonds, mutual funds, and other financial instruments.

When you buy shares, they are credited to your Demat account, and when you sell them, they are debited from your Demat account. This electronic system ensures the safe and secure storage of your investments while providing easy access and flexibility.

To help you with the same, here are the best Demat accounts for NRI:

Best Demat account for NRIs

• Zerodha NRI Demat Account
• HDFC NRI Demat Account
• ICICI Direct NRI Demat Account
• Motilal Oswal NRI Demat Account

Before investing in the Indian stock market, there are a few things you should know.

• All transactions with mutual funds must be in Indian National Rupees (INR). Payment and returns will both be in INR.
• You'll need any one of the following types of bank account: NRE Account, NRO Account or FCNR Account.
• You can't invest in all sectors. RBI guidelines prohibit NRIs from trading currency derivatives, commodities, and intraday goods. Stick to delivery-based products in permitted sectors.
• NRIs can hold a maximum of 10% of a company's paid-up capital and invest only 5% (repatriable or non-repatriable) per company.
• NRIs are prohibited from investing in specific sectors, including the lottery business, gambling and betting, casinos, real estate businesses, and the construction of farmhouses.
• They also cannot trade in Transferable Development Rights (TDRs).
• They cannot invest in companies that manufacture cigars, cheroots, cigarillos, and cigarettes, whether of tobacco or tobacco substitutes.
• They cannot invest in activities/sectors not open to private sector investment, such as atomic energy and railway operations. Also banned for NRIs are firms who have foreign technology collaboration, including licensing for franchise, trademark, brand name, and management contracts.
• NRIs need to obtain RBI approval to trade in scrips under the caution list. The caution list comprises stocks where NRI investments are nearing the threshold holding limit. NRIs are not allowed to trade in stocks listed under the ban list. The ban list comprises stocks where NRI investments have reached the threshold limit set by the RBI.

1. Zerodha NRI Demat Account

Zerodha offers NRI Demat accounts to help NRIs conveniently invest in the Indian stock market. Here's a breakdown of key information:

Account Types:

1. Portfolio Investment Scheme (PIS) account: A PIS account requires a permission letter from the RBI to buy and sell shares in the Indian markets. The permission letter has to be through one of Zerodha's partner banks (HDFC, IndusInd, IDFC First, Axis, Yes Bank). In this account, funds from both NRO (non-repatriable) and NRE (repatriable) bank accounts can be used for investing.
2. Non-PIS account: A Non-PIS account does not require a permission letter from the RBI. In this account, funds can be invested only from an NRO bank (any NRO Bank) account. The Non-PIS account is recommended as it has fewer restrictions, lower costs, and a more effortless investing experience.

Account Opening:

• Offline process: Unlike resident accounts, NRI accounts require an offline application.
• Documentation: Varies depending on account type and PIS permission. You'll need KYC documents, a PAN card, address proof, etc.
• In-person verification (IPV): Mandatory for all NRIs, done through webcam or physical visit.

Zerodha NRI Demat Account Charges:

• Account opening fee: ₹500
• Brokerage:
  • Non-PIS account: 0.5% or ₹100 on equity delivery orders, whichever is lower
  • PIS account: 0.5% or ₹200 on equity delivery orders, whichever is lower
  • Derivatives: ₹100 per order
  • Account Maintenance Charges (AMC): ₹500 + 18% GST

2. HDFC NRI Demat Account

An HDFC NRI Demat account is a valuable tool for Non-Resident Indians (NRIs) to invest in the Indian stock market. Here's a breakdown of key aspects:

Features:

• Invest in equities, IPOs, and derivatives
• Delivery-based trading on both NSE & BSE
• Portfolio Investment Scheme transactions online
• Invest through repatriable as well as non-repatriable funds
• Online IPO application through NRE/NRO account
• Daily Investment Calls to all NRIs
• Dedicated customer care and much more

HDFC NRI Demat Account Charges:

• NRI Account Opening Charges: ₹1000
• NRI Account AMC: ₹1,000
• Equity Delivery Brokerage: 0.75%
• Equity Future Brokerage: 0.025% (Both Buy & Sell)
• Equity Options Brokerage: ₹100 per lot

3. ICICI Direct NRI Demat Account

Here's information on ICICI Direct NRI Demat Account:

Key features:

• Combines Demat, Trading, and Savings accounts for seamless investing
• Tailored features, support, and resources for NRIs
• Convenient application process from anywhere in the world
• Manage your account 24x7 online or through the mobile app
• Access stocks, mutual funds, IPOs, bonds, derivatives, and more
• Choose a repatriable or non-repatriable account based on your investment goals and preferences
• Adheres to Foreign Exchange Management Act regulations for NRI investments

4. Motilal Oswal NRI Demat Account

There are two types of NRI Demat Accounts NRIs can invest in via Motilal Oswal –

• Repatriable investment NRI Demat Account: This is a type of account for remittance outside India. This account allows you to hold and trade in any securities (Equity, Debt, Mutual Funds, etc.) purchased in India in any currency other than the Indian Rupee.
• Non-repatriable investment NRI Demat Account: This type of account does not allow the investor to transfer or repatriate any funds outside India, and the funds and investments remain within India.

Motilal Oswal NRI Demat Account Charges:

• Account opening charge: ₹999
• Annual Maintenance Charges: ₹999 per year

The brokerage and other charges include:

• Brokerage Charges: As applicable as per the tariff sheet at the time of account opening
• Statutory charges like STT, Transaction charges, GST, SEBI Charges, etc., will be applicable as per the prevailing rates decided by relevant authorities.

Documents required to open NRI Demat account

List of documents while registering NRI/PIO/OCI Clients as may be applicable:

1. Document ensuring the status of the entity
   1. In the case of an Indian passport - Valid passport, place of birth as India, Valid Visa – Work/Student/employment/resident permit, etc.
   2. In case of a foreign passport: Valid passport and any of the following:
      1. Place of Birth as India in foreign passport
      2. Copy of PIO/OCI Card as applicable in case of PIO/OCI
2. PIS Permission Letter from the respective designated bank
3. PAN Card
4. Overseas Address: Driving License/ Foreign passport /Utility Bills/Bank statement (not more than 2 months old)/ Notarised copy of rent agreement/ leave & license agreement/sale deed.
5. Photograph of Investor.
6. Proof of respective bank accounts & depository accounts.

Conclusion

Selecting the best Demat account for NRIs is a critical step towards maximising investment opportunities in the Indian markets. A suitable Demat account offers access to a wide range of investment options, simplifies the tracking of investments, and aids in the repatriation of funds.

When choosing a Demat account, it is important to consider your investment objectives, account opening charges, brokerage fees, research tools, customer service, and overall user experience. By making an informed decision and following the necessary steps, you can open a Demat account that meets your needs and helps you achieve your financial aspirations as an NRI.