What if I continue using resident demat account after becoming NRI?

While technically you can do it if you do not inform the bank or broker about your change of status, but this is against the law.

The section 6 of the Income Tax Act, 1961 and RBI circular No.8/2013-14 in India clearly define the NRI Status. The financial transactions done by an NRI are reported to the RBI by the bank, broker, Custodian or Mutual Fund AMCs.

As soon as your status changes to an NRI, you should inform the financial organizations you are dealing with in India. They will help you to convert your existing accounts (Demat, Trading, Bank etc.) to the NRI accounts and transfer holdings to the new account.

Note:

• A resident demat account can be converted into an NRI demat account.
• A resident trading account cannot be converted. It has to be closed.
• If you are trading in F&O, you will have to open an additional account with Custodian. Unlike resident trading accounts where the broker keeps the margin money, in case of an NRI, the Custodian holds your margin.