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 sale 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. Role of Central Depositories and Stock Brokers

The demat accounts can be opened with any of the two government approved depositories NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).

The stock brokers has to become a member of the depositories and has to act as an intermediary between the central depository and the customer. Both of these depositories hold the demat account and its holdings, a stock broker just acts a bridge to connect the customer to the depository. The NRI bank account has to be linked with an NRO or NRE bank account. The earnings from the securities like dividends and interest are auto-credited to the linked bank account.

NRI Demat Account and Regulations

As per the RBI guidelines, the NRIs can open two separate demat accounts for the repatriable and non-repatriable investments.

An individual needs to link their NRE bank account whereas for non-repatriable funds link their NRO Bank account with the NRI demat account.

Important features of NRI Demat Account

1. A Demat account holds the securities in an electronic form.
2. An NRI can open more than one demat account in different brokers.
3. NRI demat account can be opened with any stock broker such as Zerodha, SBI CAP and Axis Direct etc.
4. NRI does not require any permission from RBI in order to open a demat account.
5. An NRI needs to open two others separate demat accounts for repatriable and non-repatriable investments.
6. An NRI Demat account can be linked with NRI bank account for the auto credit fo dividends, bonus, etc. that are earned from their investments.