NRI Trading Step by Step Guide

Published on Monday, November 11, 2019 by Chittorgarh.com Team

NRI Account Enquiry Form

Open NRI account to invest in the Indian stock market. Ask questions and learn to trade.

Name:Phone
Email:
Country:
Are you a day trader?
NRI Trading Step by Step Guide

The Indian stock market offers a plethora of opportunities to trade and invest. NRIs are allowed to invest in stocks, Futures & Options (F&O), IPOs, and Mutual Funds, amongst other securities. However, they have to trade in a different regulatory framework and compliance process than resident investors.


NRI Trading Process

Once you have opened all the required accounts (NRI Bank, Trading and Demat Account), you are set for trading. The steps to trading in stocks depend on whether you're holding a 2-in-1 or a 3-in-1 account. We will explain to you both the steps:


1. NRI Trading Process (3-in-1 Account)

In an NRI 3-in-1 account, the NRI Bank Account (PIS enabled), Trading and Demat account are opened with the same broker (or bank) i.e. ICICI, HDFC, SBI. These accounts are well integrated to offer seamless transactions between them. Some brokers also call it the NRI 4-in-1 account as they open 2 bank accounts; PIS and Non-PIS enabled bank account.

Steps to Buy/Sell Stocks by NRI

  1. Choose an online trading software (mobile app, website or trading terminal)
  2. Log in to the trading software
  3. Go to the equity section and then place the order page. Here you need to enter or select the following information:
    • Select the exchange (BSE or NSE) you want to place orders in.
    • Stock Name- Mention the Stock Code in the field. If you do not know the Stock code, enter initial letters of the stock and click the 'Find Stock Code'.
    • Quantity - Enter the number of shares you want to buy.
    • Order Type - Market or Limit
    • Price - In case you select the limit order type.
    • Click Submit
  4. Your broker's system will check the availability of the funds in your PIS linked NRE account. If you have sufficient funds the buy order will be sent to the exchange. If you wish to modify the Order, you can do it in the 'Order Book'.
  5. Once the buyer/seller found, the order gets executed by the exchange and a confirmation is sent as an alert in the trading application.
  6. At the end of the day, a contract note is prepared by the broker and sent to you by email. The contract note provides the details of a trade with stock name, quantity, trade value, brokerage, and taxes, etc.
  7. In the case of a buy order, funds are withdrawn from the linked NRI account. The shares are deposited in your demat account on T+2 days where T is the day of trading.
  8. In the case of sell transaction, shares are withdrawn from your demat account. The funds are deposited in your linked NRI bank account on T+2 day.
  9. Bank reports all the transactions from NRI Bank Account (PIS enabled) to the RBI daily.

2. NRI Trading Process (2-in-1 Account)

The NRI 2-in-1 account is a combination of trading and demat accounts. A broker who does not have a banking license offer this account. NRIs have to open NRE/NRO bank accounts and get PIS permission before opening the trading account.

One key difference between trading with a 3-in-1 account and the 2-in-1 account is that in a 2-in-1 account, the broker has to request the fund from the bank (3rd party) after the trade is done. In the case of the 3-in-1 account, the funds for trade are internally settled.

Process of fund settlement in the 2-in-1 account

In an NRI 2-in-1 account, your funds are not directly transferred to your trading account. You need to transfer funds to the PIS enabled bank account before trading. At the end of the day, your broker will send a contract note to the bank detailing your buying transactions. The bank then credits money to the broker's account.

Steps to Buy/Sell Stocks by NRI

 

 

  1. Transfer funds from your NRE/NRO bank account to your PIS Bank Account. The bank will inform your broker on how much funds have been allocated. This is then updated on the trading account as an available limit. The money is held in your PIS bank account.
  2. Pick and online trading software (mobile app or website) offered by the broker and log in.
  3. Go to the watchlist and add the stocks of your interest.
  4. Click on the buy/sell button next to the selected stock.
  5. Fill the order forms with the following detail:
    • Order Type - Market or Limit
    • Quantity- Enter the number of shares you want to buy.
    • Price - In case you select the limit order type.
    • Click Submit
  6. Your broker's system will check the availability of the funds in your trading account (for 'buy' orders) or your demat account (for 'sell orders'). If you have sufficient funds/shares the order will be placed to the stock exchange.
  7. Once the buyer/seller found, the order gets executed at the exchange and a confirmation is sent in the trading application.
  8. At the end of the day, a contract note is prepared by the broker and sent to the bank and the customer by email. The contract note provides the details of a trade with stock name, quantity, trade value, brokerage, and taxes, etc.
  9. In the case of buy order, the bank transfers the funds to the broker. The shares are deposited in your demat account on T+2 days where T is the day of trading.
  10. In the case of a sell transaction, shares are withdrawn from your demat account. The funds are deposited by the broker into the linked NRI bank account on T+2 day.
  11. Bank reports all the transactions from NRI Bank Account (PIS enabled) to the RBI daily.

Note:

  1. Please make sure that the securities are not in the RBI ban list before executing the order.
  2. Make sure funds for purchases and securities are available before executing any buy/sell order.
  3. Securities will be transferred to the respective repatriable/non-repatriable demat account depending upon whether the purchases are made on repatriation or non-repatriation basis.
  4. Buy transactions in the cash segment are settled by delivery only.

 

ProStocks Non-PIS NRO Trading

 

Frequently Asked Questions

  1. 1. Can NRIs buy/sell stock online in Indian Stock Markets?

    Yes, most stock brokers offer the online trading facility to NRIs. This mainly includes online discount brokers offering 2-in-1 account (trading and demat) i.e. Zerodha, Prostocks.

    However, there are some stock brokers, mostly banks offering 3-in-1 account, who may not offer online trading services, particularly to US and Canada based NRIs due to additional compliance requirements. Please check with the stock broker before opening the trading account.

    NRIs can use the online trading software provided by the stock broker to place buy/sell orders online. The trading software and process to place a buy/sell order are similar to resident Indian customers.

     

  2. 2. What are the options available to NRI to place trading orders?

    An NRI can place a buy/sell order in the Indian Stock Exchange in 3 ways:

    1. Online Trading: An NRI can use any of the online trading software provided by your stock broker to place buy/sell orders online.
    2. Call & Trade: Most brokers offer call n trade facility wherein you can place a buy/sell order on the phone. You need to call a dedicated phone number, authenticate yourself and then direct the representative to place orders.
    3. Relationship Managers: Some brokers don't allow online trading facilities to US-based NRIs. Such investors need to communicate with their Relationship Managers and place orders through them.

     

  3. 3. Can an NRI do intraday trading in India?

    No, NRIs are not permitted to do Intra-day trading in India Stock Market.

    Here is the list of what NRIs can do and what not:

    NRI available Investment Options in India

    Instruments

    NRI Permitted?

    Equity Delivery (Cash & Carry)

    Yes

    Equity Derivatives (Future & Options)

    Yes

    ETF

    Yes

    NCD / Bonds

    Yes

    IPO

    Yes

    Equity BTST (Buy Today Sell Tomorrow)

    No

    Short selling

    No

    Currency Derivatives

    No

    Commodity Derivatives

    No

     

  4. 4. How NRIs trading in India can remit Sale proceeds?

    If the stocks sold were held on repatriation basis, the sale proceeds, after deduction of taxes, will be credited to his NRE /FCNR(B)/NRO accounts whereas sale proceeds of stocks held in the non-repatriable basis are credited only to NRO accounts.

     

  5. 5. How to make payments for NRI stock trading in India?

    The payment for buying stocks on BSE & NSE on a repatriation basis needs to be made through inward remittance of foreign exchange or out of funds held in an NRE/FCNR bank account.

    For shares purchased on a non-repatriation basis, NRIs can use the funds in their NRO bank account.

     

  6. 6. Can an NRI do online trading in India?

    Yes, NRIs are permitted to trade online in India in Equity and Currency at BSE and NSE exchanges. Many NRIs living around the world regularly invest and trade in India. NRI investment in equity on a non-repatriation basis is very simple. But the investment on repatriation basis slightly complicated due to RBI and SEBI regulations for this.

    Once your NRI Trading, NRI Demat and NRI Bank Accounts are set up, the stock market investments are totally online. NRI customers can invest or trade from anywhere around the world.

    If you recently become an NRI and use to trade in India before, remember that NRI trading is allowed only in limited segments and scripts. The brokerage for NRI accounts is higher than that for resident accounts.

    Here are a few key things to know about what an NRI could do and what he could not:

    • Equity Delivery and F&O trades are allowed.
    • Intraday trading is not allowed.
    • Commodities trading is now allowed.
    • Order types like BTST or STBT are not permitted.

     

  7. 7. Can an NRI invest in Indian Stock Market?

    Yes, NRIs can invest in India Stock Market. It's quite easy for NRIs to invest in Indian Stock Market. To invest in India, NRI needs the following accounts:

    • NRI Bank Account (NRE or NRO)

      This is where the money is withdrawn and deposited.

    • NRI Demat Account

      Demat account is to hold your securities in electronic format. Unlike most developed countries where equity holding is kept with the broker, in India, they are kept in a separate account called demat account. The demat account is a secured online account. You have to provide limited Power of Attorney (PoA) to your broker so that he can withdraw shares when you sell to give it to the buyer.

    • NRI Trading Account

      To place buy/sell orders.

    In additions, the NRI investor also needs the Portfolio Investment Scheme (PIS) permission by RBI for investments on a repatriation basis. Usually, the bank where you have an NRI bank account helps you get the PIS.

     

  8. 8. Can NRI do intraday trading?

    No, NRIs are not permitted to do intraday trading in the Indian stock market. NRIs are permitted to trade in Equity Delivery, Equity F&O, and Currency F&O. NRIs are also not permitted to trade in commodities in India.

     

Rate this article
0
0.0
Rating:Rated 0.0 stars

Vote Here ...

Comments

No comments found. Be the first to post a comment.








Search Chittorgarh.com:

Download Our Mobile App

Android App iOS App