A Demat Account is a compulsion for an individual i.e. Indian Resident or NRI if he is willing to invest in the Indian Stock Market. An individual requires a demat account to make investments in Stocks, IPOs, Mutual Funds, Bonds, NCDs etc.

A demat account simply holds the securities in the electronic format. This account is very similar to the bank account but the only difference is that instead of money, it holds stocks, Mutual Funds, ETF, NCD and Bonds. With the help of demat account trading and investment becomes easy, fast and secure.

NRI Demat Account

The Indian Stock Market is an attractive destination for the investors across the world. In order to gain the maximum wealth NRI seeks the opportunity of making investments in stocks and mutual funds, IPOs, etc.

The NRI Demat account is no different from the normal demat account. The Operating process and the charges for the demat account is same as the demat account for normal persons. The only difference in the demat account of Indian Resident and NRI Demat account is its name.

The Stock brokers are the registered i.e. authorized agents of the central depositories. The stock broker simply acts as an intermediary between the customer and the depository. The NRI Demat Account is simply linked with the NRO or NRE bank account. The proceedings from the sell of shares, dividends and earnings can be directly deposited to the linked bank account. An NRI customer can simply open more than one demat accounts on the same name with the different brokers. Ideally, one demat account is opened with one depository participant.

Note:

According to the RBI guidelines, an NRI must maintain the two separate accounts for the non-repatriable investments. This simply means that if an individual simply trade with funds from the NRE Account then the sale proceed can be credited to the NRE Account for repatriation. If one chooses to trade on a non-repatriable basis then the proceeds can be easily credited to the NRO Account.

Important Features of NRI Demat Account

1. A demat account is considered to be the safest way to keep all the securities safe for the long term.
2. NRI Demat Account can be opened with any Depository Participant (DP).
3. To open a demat account, NRI do not require permission from RBI or SEBI.
4. The account can be opened as a single holder or the joint holder.
5. This account also provides the nomination facility.
6. The NRI demat account has to be linked with the NRI Bank Account (NRE or NRO) for the direct deposit of dividends.
7. The customer needs to provide a signed power of attorney (PoA) to the stock broker. This PoA avails the broker in order to withdraw the shares from the demat account at the time when the customer sells them online through the broker. NRI Demat Account Types The NRI Demat Account can be classified into two major subtypes:
   1. A NRE Demat Account (Repatriable Demat Account). 2. A NRO Demat Account (Non-Repatriable Demat Account).

      At the time of opening a demat account, an NRI will have to mention the type of account as NRI and subtypes as Repatriable or Non-Repatriable. The NRI can also open separate demat accounts for holding the Repatriable and Non-Repatriable securities.

      NRE Vs NRO Demat Account Repatriable Demat Account (NRE Demat) Non-Repatriable Demat Account (NRO Demat)

      	Repatriable Demat Account (NRE Demat)	Non-Repatriable Demat Account (NRO Demat)
      Purpose	To buy/sell shares on the repatriable basis.	To buy/sell shares on the non-repatriable basis. To hold securities that are bought as Indian Resident becoming NRI.
      Linked with bank account	NRE Bank Account with PIS	NRO Bank Account (Non-PIS)
      Dividend/Interest	Both the principal and dividend/Interest are Repatriable	The Principal is Non-Repatriable and dividend/interest is Repatriable.

      NRI Demat Account Opening Process

      The opening procedure is way simpler as it does not require any approval from the RBI. The demat account can be simply opened with the brokers or banks that are registered with the NSDL or CDSL as depository participant. All of the major banks and the stock brokers like HDFC, Kotak, ICICI, Axis Bank, Zerodha, Sharekhan and various others offers NRI Demat Account Opening services.

      Necessities for NRI Demat Account

      An NRI customer must hold certain account and permission before opening a demat account:

      1. PAN Card.
      2. NRI Bank Account (NRE or NRO).
      3. PIS approval by RBI
      Documents Necessary for NRI Demat Account

      Some of the following documents that are required to open an NRI Demat Account.

      1. Account opening form filled and signed by the holders.
      2. PIS permission letter from the bank (i.e. issued by RBI).
      3. Photographs of the holders with sign across the photo.
      4. Holder’s PAN Card copy.
      5. Overseas Address Proof.
      6. A cancelled cheque of the linked NRE/NRO Bank Account specified in the form.
      7. A photograph and signature of the nominee.
      Note:

      The documents must be verified by the local Indian Embassy or any other competent authority approved by the banks.

      NRI Demat Account Charges

      The Demat Account charges includes fees by the Central Depository and Depository Participant (Broker). It includes government taxes to be paid. Some NRI Demat Account Charges are:

      1. Account Opening Fee (One-time) – Most of the brokers charge an account opening fees in order to process the account opening application. The fee is paid as one-time during the account opening process. The stock brokers issue various schemes and programs wherein they provide discount or opening fees to waive it completely.
      2. Annual Maintenance Charges (Yearly) – The Demat AMC is the amount charged as fees by the broker in order to maintain the demat account. This fee is the annual fees charged irrespective of whether you have done transaction in the NRI Demat Account or not.
      3. Debit Transaction Charge- At the time of selling shares or withdrawing them from the demat account, an amount is charged. Few brokers may charge a flat fee per transaction where as other charges may include it in the percentage of the value of transaction.
      4. Other charges- The other charges for NRI demat account includes the pledge fees and fee for modification of the customer’s personal info.
      NRI Demat Account Taxation

      The NRI Demat Account transaction charges are taxed under GST (18%). The GST is applicable on various other charges except the stamp charges for Power of Attorney (PoA).