FAQs For NRI – Trading Account
A/C Opening
A Non-Resident Indian may open a Demat & Trading account with KUNVARJI by linking his/her Non-Resident Ordinary (NRO) or Non-Resident External (NRE) savings bank account. NRE account are opened when NRI client wishes to invest funds transferred to India through inward remittance through banking channel. For investment of funds an NRI client may have in India out of sale of property, inheritance or prior savings, such NRI can open account in NRO category subject to applicable rules as prescribed by RBI.
Funds invested through NRE account can be repatriated abroad by the client at any time. Funds invested through NRO account are not allow to repatriate funds abroad except through LRS scheme of RBI.
NRIs are allowed to trade in cash market for delivery based transactions only. Intraday trading is not allowed. NRI can trade in Future & Option segment through NRO account after completing process as prescribed by NSE\BSE.
An NRI desirous of investing funds transferred to India through inward remittance through banking channel, will have to open a NRE savings account and a Portfolio Investment Scheme (PIS) account with a bank authorized to open such accounts. PIS permission letter from Reserve Bank of India (RBI) is to be obtained before NRI can open a Demat and Trading account with a stock broker\depository participant in India. The Bank where you have opened an NRE account will help you obtain a PIS permission letter, after providing certain documents.
A NRI can open both NRE as well as NRO account simultaneously. NRE trading account will have to be mapped with NRE demat account and NRE PIS account linked with NRE savings account. NRO trading account will have to be mapped with NRO Demat account and NRO Bank account.
There are various documents which are required to be sent along with the printed & filled up account opening form while opening a Demat & Trading account with KUNVARJI, which are mentioned as below:
1. Copy of PIS permission letter;
2. Copy of PAN card;
3. Overseas address proof – Copy of Driving License/Foreign Passport/Utility Bills/Bank Statement (not more than 2 months)/Notarized copy of rent agreement/Leave & License agreement/ Sale Deed;
4. Indian address proof, if any;
5. Passport size photograph;
6. In case of an Indian Passport: Copy of valid passport with the place of birth as India and Copy of Valid Visa;
7. In case of Foreign Passport: Copy of Valid passport, Copy of PIO/OCI card.
8. Proof of Bank account (a cancelled cheque leaf of your NRE or NRO savings bank account);
Note: Copy of PAN card, Passport, and Foreign address proof to be notarized by Indian Embassy or any other competent authority like Authorized officials of overseas branches of scheduled commercial banks registered in India, public notaries, court magistrate, judge, or the Indian embassy/consulate general in the country that they reside in the country where the NRI resides. The attesting authority should affix a “verified with original” stamp, name, designation, signature and date on the said documents;
9. Declaration of P.O. Box in your residing country; and
10. Foreign Account Tax Compliance Act (FATCA) Declaration Form
Dividend
The dividends will get credited to your NRO or NRE account respectively depending on which of these you’ve linked to your DEMAT account
If you have already linked an NRE account, you do not have to open an NRO account in order for the dividends to be credited & vice versa.
Note: The dividend is credited by the RTA (Registrar and Transfer Agents). There may be cases where they may not be able to credit the dividend to your NRE account. In such cases, a cheque would be sent to your registered address.
In scenarios, where you have both NRE & NRO accounts, they will be mapped to their own respective DEMAT accounts. So depending on which DEMAT account you have the stock eligible for dividends in, the bank account linked to that, either NRE/NRO will get the dividend Credit.
Trade
No, NRIs aren’t allowed to make Intraday trades or trade in MCX commodity futures.
Buy Process
The process flow for purchase of securities through trading account is as under..
1. Client will have to transfer funds to NRE savings account linked with his\her PIS account through inward remittance.
2. Based on the availability of funds, the client can place an order for purchase of securities through KUNVARJI.
3. Upon execution of purchase order, KUNVARJI shall send digital contract note to the client as well as to the PIS banker.
4. The PIS banker will make payment of purchase consideration to KUNVARJI by debiting client’s NRE savings account.
5. The PIS banker will file information of transaction with RBI.
The Process flow for sale of securities is as under..
1. NRE client can place sale order only for those securities which he\she is holding in his\her NRE demat account linked with his\her NRE trading account.
2. Upon execution of sale order, KUNVARJI shall withdraw securities from NRE client’s demat account and deliver to stock exchange to fulfill settlement obligation of the NRE client.
3. KUNVARJI shall send digital contract note to the client as well as to the PIS banker of NRE client.
4. The PIS banker of the NRE client shall record the transaction, complete the reporting to RBI and compute long term\short term capital gain\loss that occurred to the client.
5. After KUNVARJI receives funds settlement from stock exchange (after 2 working days), it shall remit sale proceeds to the PIS banker of the NRE client.
6. The PIS banker will credit the proceeds to NRE client’s saving account after deduction of tax at applicable rate in case the sale transactions has resulted in capital gain.
PIS Letter
Portfolio Investment Scheme (PIS) is a scheme of Reserve Bank of India under which NRIs can purchase or sell shares of Indian companies on Stock Exchanges.
All stock exchange transactions are to be routed through the designated branch for this purpose, the NRI/PIO has to apply to a designated branch of a bank, which deals in Portfolio Investment
NRI Account
An existing demat account of a client opened as resident individual cannot be converted to NRE demat account as NRE demat account is allowed only for the purpose of securities purchased out of funds remitted from abroad to India through inward remittance.
An existing demat account of a client opened as resident individual
can be converted to NRO account.
An existing Trading account of a client opened as resident individual can be converted to NRO trading account but cannot be converted to NRE trading account.
An NRE bank account is a bank account where both the principal and the interest earned can be repatriated abroad by the account holder at any time without any restrictions. Repatriation of funds from NRO bank account is allowed as per LRS scheme of RBI as per norms prescribed by RBI.
Documents required to convert the existing resident trading\demat account into NRO account –
• Account Modification Form – To update the Bank details and Overseas address in the CDSL.
• FATCA Declaration Form
• Declaration of P.O. Box – This is only for those who reside in the UAE countries.
• Notarised Copy of PAN card*
• Notarised copy of Overseas address proof* – Copy of Driving License/Foreign Passport/Utility Bills/Bank Statement (not more than 2 months)/Notarized copy of rent agreement/Leave & License agreement/ Sale Deed
• In case of an Indian Passport: Notarised Copy of valid passport* with the place of birth as India, Copy of Valid Visa
• In case of Foreign Passport: Notarised Copy of Valid passport*, Copy of OCI card.
• Proof of Bank account ( a cancelled cheque leaf of your NRO savings bank account).
*Note: Copy of PAN card, Passport, and Foreign address proof to be notarized by Indian Embassy or any other competent authority like Consulate General / Notary Public / Any Court / Magistrate / Judge / Local Banker in the country where the NRI resides.
Attestation is compulsory in the following scenario:
You will need to get the attestation of the PAN, Passport and Foreign Address proof from one of the following –
• Authorised officials of overseas branches of scheduled commercial banks registered in India
• Public notaries
• Court magistrate
• Judge
• Multi-National banks having operations in India
• Indian embassy/consulate general in the country of residence
Attestation is not required for the following scenarios:
If you are present in India and visiting any of our branches, the attestation wouldn’t be required. You can submit the self-attested documents along with a copy of the latest immigration stamping. (Please carry the original while visiting our office)