This article explains in detail about how an NRI can trade in Indian stock market. I am getting lot of mail on NRI investment doubts from our readers. I felt it would be good to write down separate article on the topic. If I have not covered any of the topic, please post it in the comments section. I will be interested in answering all your queries. If you like the article, subscribe to our future articles here.
Can NRI invest in India?
This is the basic doubt with most of the NRIs who want to invest in the Indian stock exchanges. There are no problem in investing in the Indian equity market. They can directly invest in the Indian companies equity market using their own demat account or broker account. But, they can not do the intra day trades. Intra day trade means you can buy the share today and sell it on the same day. Here you will not hold any security to your demat account. This is not allowed for the NRI investors. They can sell only what they have in the demat account. I hope this one understandable. In the next sections we will see what are requirements for NRI investors to participate in the Indian market.
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- 10 things you must know about NRI bank accounts
- Compare NRE, NRO and FCNR Bank Accounts
- How to find NRI status?
- NRI status for Gift Tax
How an NRI can start investment in India?
The following are the steps for NRI investors.
- Open a bank account.
- He should open a Demat Account with a Depository Participant to hold his shares.
- Register with broker to trade in the stock exchanges. (ie, ICICI Direct, ShareKhan, etc.)
- Above two can be done with same broker.
- Reserve Bank has authorized a few branches of few banks to conduct the business under Portfolio Investment Scheme on behalf of NRIs. These branches are the main branches of major commercial banks. NRIs will have to route their applications through any of the designated bank branches that have authorization from Reserve Bank.
- NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund.
- An NRImust open separate demat accounts for holding ‘repatriable’ and ‘non–repatriable’ securities.
- repatriable means transferring your security from India to another country. That is not allowed for the NRIs. If you bought any shares while in India, When you become NRI you can not sell that from your NRI demat account and use it outside India.
- If an NRI become resident Indian, he has to inform the bank about his new status and open new demat account in India to transfer all securities to Indian account.
Important Points for NRI Investors
- NRI can deal with only one bank at a time.
- Intra day trading is not allowed for NRIs. NRIs can trade only in delivery-based transactions.
- BTST(Buy Today Sell Tomorrow) is not allowed to NRIs.
- NRI will be allowed to invest only up to 5 % of the paid up capital of the company.
- NRIs need to have 100% funds at the time of buying. No exposure is given to NRIs. Same way, they need to have 100% stock available to them while selling. No short selling allowed.
Summary
I hope this article would be more useful for the NRI investors. If you have any doubts which I have not covered in this article, please post it in the comments section.
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June 9, 2010 at 9:49 pm
this article was very good but i had a query i.e Suppose an individual has bought stocks when he was indian and been holding the same from last 10 yrs and now because his age is 65+ he was to transfer those security to his son name who is born and brought up in US. What do you suggest in this and how can the security be transferred with less of tax implication and also to take benefit of Capital gains.
June 10, 2010 at 7:43 am
Thank you for laying out the steps.
If I remember right, the above may not work who reside in USA. Could you please clarify on that?
Regards
June 11, 2010 at 7:55 am
Hi deepak sujera,
The situation which you are asking is not the easy one to resolve. There are lot of restrictions to transfer the shares which bought in India to non Indian origin. It is better you can contact the demat account provider.
Thanks,
Krishna
June 11, 2010 at 7:56 am
Hi Satya,
Why do you think so? It is valid for NRI in any country.
Thanks,
Krishna
June 12, 2010 at 1:19 am
I am looking for NRI investor to expand our samll seed company activity “Qualitas Crop Sciences Pvt Ltd Hyderabad, India”.
With best regards,
J K Nigam
Hyderabad
http://www.qualitascrop.com
info@qualitascrop.com
June 13, 2010 at 6:03 am
Is there any public limited companies accepting Fixed Deposits. The rate of interest payable by the banks are too meager and not affordable and hence this request.
March 31, 2012 at 12:35 pm
Dear Suresh,
If you interested to invest in Indian Agriculture pls revert back to us at info@qualitascrop.com
“Qualitas Crop Sciences Pvt Ltd” is a fast growing seed company planing to go in big way. We will take care of your investment with higher ROI.
Regards/ Dr J K Nigam
Hyderabad, India
+91 9533433312
June 13, 2010 at 6:53 am
Hello V. S. Sureshkumar,
Tata Motors offering the fixed deposit schemes.
Thanks,
Krishna
June 15, 2010 at 5:48 am
Hi Krishna,
Thanks for your response. Couple of years back when I spoke to hdfc bank rep, he said there are restrictions for US based NRI’s. Just verified their site again and looks like hdfc sec do not offer those services for US NRI’s – please refer: http://www.hdfcsec.com/Common/NRIDisclaimer.htm > it states that “This service is not available to foreign residents including Non-Resident Indians (NRIs) in United States. It is available only to NRIs residing in jurisdictions permitting Investment in and Trading of Indian Securities on Indian Stock Exchanges.”
May be I am missing something – will check back with them.
Thanks again,
Satya
June 15, 2010 at 8:05 pm
Hi Satya,
It clearly shows ” This service is not available to foreign residents including Non-Resident Indians (NRIs) in United States”. That mean not allowed for the US NRIs.
Thanks,
Krishna
June 20, 2010 at 1:07 pm
Hi,
I am a NRI living in USA. I opened an account at Kotak securities through Profitshastra. This account allows me to invest in shares, mutual funds, and IPOs. It is an offline account and I have to email, fax or phone the broker to execute trade. However, I can view my statements online. Their website is profitshastra.com
–
Rohit
June 20, 2010 at 6:27 pm
HI Rohit,
Thank you for the details.
Thanks,
Krishna
September 14, 2010 at 8:12 am
Dear Sir.
I work as a Development Cosultant for social enterprising through NGOs in Orissa,India.
We feel the need of NRI investment directly in low cost housing sector for our rural market with NGOs market.
So we solicit interest of like minded NRIs investers for this social enterprenurship.
Please help us for collaboration.
With regards.
Er.K.B.Senapati.
Director-OASIS.
email: oasisconsultant@yahoo.co.in
Phone:06842253050
Cell:09439596488
September 26, 2010 at 5:28 am
this article was very good but I had a query .One of my friend is an NRE based in US.I presume an NRI does not need to have PIS account (authorization from RBI) to invest in mutual funds. How is investing in mutual funds different from purchase/sell shares/convertible debentures? Do an NRE really need to have PIS account if he do not want to invest in shares or debentures? Please check and advise.
With Regards
Prabhu
January 2, 2011 at 2:56 am
Dear Sir
I am an registered Sub Broker with Aditya Birla Money, I am also reg. with SEBI,I would like to do work with new NRI invester in india.
I am working as Sub Broker since Dec-2005,
So If u are interested in investment in indian stok then I am redy to open any type of account.
Please contect -
S.K.Srivastava
Mobil:9919241440
March 28, 2011 at 9:19 am
NRIs are welcome to invest in Fixed Deposit in a SEBI registered public listed company. For details contact:
Pintu Das
Email ID : prithwiscare@gmail.com
Mobile : +91 33 91639 47650
Skype : prithwiscare
June 3, 2011 at 12:09 pm
Dear Sir,
I am NRI residing in UAE, I would like to open an Limited Liability co. in india with 70% of partnership share.
Can i invest directly in the co, do i need approval from RBI,
Please advise.
Regards,
Jitin.
June 9, 2011 at 12:12 pm
I work for a US Broker-Dealer and I want to know if it is possible for our firm to do any filings with India if we do not have a place of business in India but we call Indian citizens to solicit them for securities transactions?
We have not done this yet, but we want to know the legality of doing this.
Thanks,
Brian
October 31, 2011 at 1:56 am
hello everyone,
the answer to the first question is that, the client will have to put a nominee, which in the case will be his son, this wud ensure minimum tax implications and will be helpful in the following ways.
1.as the client in a senior citizen, his son will not throw him out of home coz the shares will b in his name,
2. he will earn yearly dividend which will help him in meet his daily requirement
if the above things are not feasible then its better to sell the shares as there wont be any tax implication at all , and then transfer the money in his son’s account to buy back the same.
)
only brokerage wud b charged.
October 31, 2011 at 1:58 am
good one deepak sir. u earned a new follower today
October 31, 2011 at 2:00 am
the above statements are subject to my knowledge and might not be true other wise
December 30, 2011 at 2:31 am
i need an investor to expand my production capacity in mango pulp.
March 31, 2012 at 10:01 am
I want to start a business in India. I have around INR 1Cr of investment and I am looking for an equal partner with INR 1Cr investment to start together. Can this forum help me with tips on how to find a partner or co-founder for a new venture
March 31, 2012 at 1:20 pm
We Qualitas crop is fast growing seed company, looking to go in big way.
we welcome investor to make a profitable JV.
With regards/
April 1, 2012 at 3:41 am
I m interested in investing in a software idea
April 30, 2012 at 11:45 am
AS FAST GROWING IN REAL ESTATE NEED A INVESTMENT SO DO PLEASE CONTACT
+ 91 9825109988
May 6, 2012 at 12:07 pm
Hey hi everyone i have good proposal for all is that without investment and by showing some document of fixed deposit the nri client can make money five time more in just 15 day and to make that fixed deposit for hold on for a year.the great thing is that it is done all legal way.and the verfication will be done through your bank once and then our bank once for confirmation if you want more detail contact on +91-9960670766 no information may be leaked through call so have a meeting then you decide to take further step in our investment plan
jaydeep