Can NRI maintain demat account in India?

Yes, NRI can maintain an NRI demat account.

If you are an NRI and still hold a demat account which you opened when you were in India, it's important to close that demat account and open a new demat account for NRI. However, in case you do not plan to make any new investments you can continue holding the existing securities bought as a resident Indian in resident Demat account on a non-repatriation basis.

In a similar way, if you were an NRI and now moved back to India, it is required by law to close the NRI demat account and open another demat account.