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How Can an NRI Start Trading in Indian Markets?

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Here are the steps to facilitate trading by NRIs in India:

Open NRE/NRO Account:

The NRI has to open NRE or NRO savings bank account with a bank. Based on the fund remittance and purpose of opening the NRE/NRO account, you can open the Repatriable/Non-repatriable account, respectively.

Obtain a PIS letter from the banks:

After opening an NRI Bank Account, the bank will provide a PIS letter approved from RBI to invest in Indian stocks. In the case of the NRO account, you are not required to get approval from RBI for trading as RBI has waived off the PIS requirement for the NRO mode of transactions. However, the broker with whom you are trading should offer to trade without PIS else PIS would still be required.

Open a Demat & trading account:

After opening a savings account and get approval from RBI for PIS, you can open Demat and trading accounts with the stockbrokers. While opening Demat & trading accounts with the broker, you have to provide a PIS letter to link it with the NRI savings account.

Note:

  • NRIs are allowed to do equity futures and options trading only on non-repatriation basis
  • NRIs are permitted to do only delivery-based trading and cannot do intraday trading or short selling.

Here is the process for NRIs to trade in India:

  • Transfer funds from your NRI savings account to the PIS account.
  • The amount is updated in the terminal account when the bank informs the broker about it.
  • When you place a buy order, your account is automatically debited to purchase shares. Further, this amount is credited to the broker's account.
  • When you place a sell order at the end of the day, your PIS account gets credited with the amount post deduction of TDS.
  • Two contract notes for buy and sell transactions are sent at the end of the day.


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