The Indian stock market provides ample opportunities to create good wealth in the long run. The resident Indians and non-resident Indians can reap great benefits out of the share market. Under the Portfolio Investment Scheme (PINS), the Reserve Bank of India (RBI) has allowed the NRIs to invest in the stocks of the registered Indian companies on recognized stock exchanges.
Indian stock market is all set to grow nearly three times by 2022 because of the financial market developments. Demat account for NRIs provides an opportunity for NRIs to invest in bonds, IPOs, and shares of the Indian stock market.
Demat accounts ensure that the shares and securities are held in electronic form and operated from anywhere across the world. It also ensures that there is no requirement for physical documents. An NRI should know certain facts before investing in the Indian stock market.
Close Current Demat Account
If an NRI wants to invest in India’s equity market, he has to follow the RBI norms. As per the norms, an NRI cannot purchase or buy equities from the Indian stock market through his existing demat account. To put it another way, NRI must close his existing demat account, which he had opened before acquiring NRI status.
The holdings in the old demat account of an NRI shall be transferred to a Non-Resident Ordinary (NRO) demat account. NRIs can manage their earnings like dividends, pension, or rent earned in India with an NRO account. Non-Resident External (NRE) account is a bank account in which the NRI can deposit income from sources outside India. It can be converted from foreign currency to Indian currency.
Opening the Portfolio Investment Scheme (PINS) Account
The Portfolio Investment Scheme account can be said to be a demat account for NRI. As per the norms of RBI, NRI must keep two different PINS account for repatriable and non-repatriable shares. Under the PINS, the NRE account’s money can be used by the NRI to purchase stocks. Moreover, the funds shall also be automatically credited to the NRE account for repatriation. The funds shall be credited to the NRO account if the NRI wants the shares to be purchased on a non-repatriable basis. An NRI can open the PINS account based on his requirement with a depository bank. However, if the NRI reacquires the Indian resident status, he must close the PINS account.
Documents Required For Opening PINS Account
NRI willing to open a PINS account at a foreign location must submit documents that the foreign embassy attests. When present in India, NRI opening a PINS account must submit original and copies of the documents that the bank attests. The documents required by the depository are as follows.
- Latest passport size photographs
- Copy of PAN card
- Copy of passport and visa
- FEM (Foreign Exchange Management) declaration
- Invalidated cheque leaf of NRE/NRO bank account
- Address proof in India
- Address proof abroad
Things that NRIs Must Know While Investing in Stock Market
- NRI is not supposed to do intra-day trading and Buy Today Sell Tomorrow (BTST).
- NRI must not hold 10% or more of a registered Indian company and 20% or more in the case of public banks.
- NRI must make a bill to bill payments.
- In the absence of NRI, his account cannot be operated by a resident holding Indian power of attorney.
- NRI’s payment cannot be made by a resident holding Indian power of attorney.
India is the fastest growing economy in the world, provides many growth opportunities. NRIs must avail of these opportunities by investing in the Indian financial market.