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The returning NRIs need to convert their NRI accounts to the resident account immediately upon their return before making any further investments in India.
NRI investments are governed by FEMA guidelines and as per FEMA, a person returning to India permanently is considered as a resident from Day 1 of their return. Thus, a returning NRI should inform the bank and broker of their residential status and get their existing NRI bank accounts, NRI Demat Account, and NRI trading account closed or converted to resident accounts.
The NRE and NRO bank account can be re-designated as resident accounts. However, in case a returning NRI wants to retain the foreign earnings without converting them to INR, they can open a Resident Foreign Currency (RFC) accounts and transfer the NRE proceeds in that account. However, the investments would be allowed only from resident bank accounts.
The existing securities holding in NRI Demat account can be transferred to the resident Demat account on conversion. In case of existing investment in mutual funds as an NRI, a returning NRI should change the residential status in mutual fund investments from NRI to a resident and also update the resident bank details to avoid any issues.
Thus, once the resident trading, Demat, and bank accounts are ready, a returning NRI is all set to start investing again as a resident Indian.
Topic: NRI Account Meaning
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