Can an NRI hold resident demat account?

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An NRI can hold a resident Demat account only to hold the securities purchased in the capacity of a resident Indian as per section 6(5) of Foreign Exchange Management Act (FEMA) rules. However, if an NRI plans to make any fresh investments, the resident Demat account should be converted to NRI Demat Account as soon as there is a change in the residency status as per the FEMA and Income tax rules.

It is important to note that all investments and bank transactions in India by an NRI, OCI, PIO, or FPI are closely monitored by the Government of India. Hence in case, an NRI does want to make any new investments it is better to sell your holdings or gift the shares to your family members in India to avoid any issues.


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