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Introduction
This article explains in detail about how an NRI can
trade in Indian stock market. I am getting lot of mail on NRI
investment doubts from our readers. I felt it would be good to write down
separate article on the topic.
Can NRI invest in India?
This is the basic doubt with most of the NRIs who want
to invest in the Indian stock exchanges. There are no problem in investing
in the Indian equity market. They can directly invest in the Indian
companies equity market using their own demat account or
broker account. But, they can not do the intra day trades. Intra day trade
means you can buy the share today and sell it on the same day. Here you
will not hold any security to your demat account. This is
not allowed for the NRI investors. They can sell only
what they have in the demat account. I hope this one
understandable. In the next sections we will see what are requirements for
NRI investors to participate in the Indian market.
How an NRI can
start investment in India?
The following are the steps for NRI investors.
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Open a bank account.
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He should open a Demat Account
with a Depository Participant to hold his shares.
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Register with broker to trade in the stock
exchanges. (ie, ICICI Direct, ShareKhan, etc.)
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Above two can be done with same broker.
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Reserve Bank has authorized a few branches of few
banks to conduct the business under Portfolio Investment Scheme on
behalf of NRIs. These branches are the main branches of major commercial
banks. NRIs will have to route their applications through any of the
designated bank branches that have authorization from Reserve Bank.
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NRIs are permitted to make direct investments in
shares/ debentures of Indian companies/ units of mutual fund.
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An NRI must open separate demat
accounts for holding ‘repatriable’ and ‘non–repatriable’ securities.
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repatriable means transferring your security
from India to another country. That is not allowed for the NRIs.
If you bought any shares while in India, When you become NRI
you can not sell that from your NRI demat account and
use it outside India.
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If an NRI become resident
Indian, he has to inform the bank about his new status and open new
demat account in India to transfer all securities to
Indian account.
Important Points for NRI Investors
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NRI can deal with only one bank at a time.
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Intra day trading is not allowed for NRIs. NRIs
can trade only in delivery-based transactions.
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BTST (Buy Today Sell Tomorrow) is not allowed to
NRIs.
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NRI will be allowed to invest only up to 5 % of
the paid up capital of the company.
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NRIs need to have 100% funds at the time of
buying. No exposure is given to NRIs. Same way, they need to have 100%
stock available to them while selling. No short selling allowed.
Different Types of NRI Bank Accounts
Introduction
There are different types of
Non-Resident Indian (NRI) bank accounts and services.
It is the most common query which I receive. So, I
planned to write down one article explaining the details about the
NRI bank accounts. I hope this article will be useful for who
want to open the
NRI
accounts.
Types of NRI Bank accounts
There are many types of NRI banks accounts available. But, here I will
be explaining only the most widely used and offered by the leading banks
in India. The following are the three types of NRI bank accounts offered
by most of the bank across India:
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NRE Savings/Fixed Deposit Account
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NRO Savings Fixed Deposit Account
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FCNR Fixed Deposit Account
In the following section I will look into
the features and benefits of the each account in details. If I miss out
any thing, please post it in the comments section on the site blog or
contact us directly.
NRE Savings/Fixed Deposit Account
The Non Resident External (NRE) Savings Account is
meant for Indians residing abroad. It allows you
to transfer foreign earnings easily to India. The following are the few
important points regarding the NRE account.
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NRE account can be opened as
Savings and Fixed deposit accounts.
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There is no tax on interest earned from these
accounts. Also there is no wealth tax.
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That the above tax exemptions are available only
for an NRE Account held by an individual and not for those maintained by
OCBs (Overseas Company Bodies)
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The currency maintained in this account is Indian
Rupee.
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Can open Joint account with any Non-Resident
Indian. Cannot open Joint account with Indian Resident .
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You can easily transfer money
to India.
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Nomination is allowed in NRE Accounts.
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Can not deposit Indian Currency
in to this account.
NRO Savings Fixed Deposit Account
The following are the key points on NRO account.
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NRO account can be opened as the
Savings or Fixed Deposit account.
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Currency maintained in this account is Indian
Rupee.
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Can open this account with any Indian Resident.
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Interest earned in this account is 30% taxable and
surcharge and education cess will be included. It is applicable for both
savings and fixed deposit accounts.
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You can use this account to pay any bill and
expenses in India.
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Enjoy the convenience of banking at any of our
branches in India.
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Nomination is allowed in NRO Accounts.
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Can deposit Indian Currency in to this account.
FCNR Fixed Deposit Account
The following are the key points for Foreign
Currency Non-Resident (FCNR) Fixed Deposit
bank account:
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Earn Indian Interest Rates on your Foreign
Currency deposits with our Foreign Currency Non-Resident Fixed
Deposit.
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The entire deposit (principal and interest) is
exempt from tax
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Open the deposit jointly with any other
NRI
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Get an overdraft on your Savings / Current account
against your FCNR Fixed Deposit
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Nomination Facility available
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Joint accounts with Indian Residents not allowed.
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Following currencies are allowed in this account:
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US Dollars
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Pounds Sterling
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Euro
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Japanese Yen
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Australian Dollars
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Canadian Dollars
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Can not deposit Indian Currency in this account.
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Minimum 1 year and maximum 5 years is allowed.
10 things you must know about NRI bank accounts
Introduction
I am writing this article to explain few important points related to
opening the NRI bank account. There is few
questions asked by our readers related to opening new NRI bank account
when leaving to another country. I thould it would be good idea to put few
key points on that topic.
10 Points You Must Know about NRI Bank Accounts
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There is three types of Rupee account for the NRI
people. Those are Non-Resident External(NRE) ,Non-Resident
Ordinary(NRO) and Non-resident (Non-repatriable) Rupee Deposit accounts
(NRNR) accounts.
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If you are leaving outside India, you must inform
your bank about the NRI status. It is not legal to have the savings bank
account in India, while you are outside India. They will change your
savings bank account status to Non-Resident Ordinary(NRO)
account.
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NRE accounts must be opened by the account holder
itself, not by the power of attorney holder in India. Resident Power of
Attorney holder can operate on the NRE accounts. But only for local
payments to be made on behalf of the account holder.
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Funds deposited in the NRE
account can be freely used outisde India. But, Funds in the NRO
accounts cen be used only in India.
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In the case of NRE accounts, the interest rates
for deposits up to one year should not exceed Bank Rate minus 2
percentage points. Interest rates on NRO accounts are fixed as in the
case of domestic deposits.
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It is possible to get the loans and overdraft
against your NRE/NRO accounts.
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It is possible to transfer
money between two NRE accounts.
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Remittances made for credit
to rupee accounts (i.e. NRE/NRO/NRNR accounts)
maintained by NRIs are converted at market rate.
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Banks have been advised to re designate such
accounts as resident accounts on return of the account holder to India.
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Interest accrued on NRE accounts
are not taxable. where as interest on NRO accounts are
taxable.
Compare NRE, NRO and FCNR Bank Accounts
Introduction
In our previous article I have explained about the
three types
of NRI accounts. I felt it is good if I put
a comparison chart to explain the difference between these three accounts.
That will be good for the readers to quickly differentiate the nature of
accounts.
Comparison Chart for NRE,
NRO and FCNR
Hope that my article is very clear to you
all, If I have not covered any of the topic, please post it in the
comments on
site blog. I will be interested in answering all your queries,
and adding more info accordingly.
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