NRO Demat Account Opening Process -Step by Step Process

NRIs do not reside in India but are allowed to invest in the local stock market. However, there are some special rules for NRIs to invest in the Indian stock market. The basic rule is to open a NRO (Non-Resident Ordinary) bank account in India. One can further apply for a NRO Demat account to start investing. Read on to understand the process of opening a new NRO Demat account in India.

What is an NRO Demat Account?

NRIs are required to open NRO bank accounts in India to manage their income. NRO is a type of bank account used to manage their earnings in India. Since NRIs cannot open savings accounts in India, they are asked to apply for NRO accounts. One can deposit and manage income earned in India from pensions, dividends, rents, and other sources in an NRO account.

Once NRIs have an NRO account, they can apply for a respective Demat account to invest in the Indian stock market. For added convenience, NRIs can directly apply for an NRO Demat account.

Benefits & Features of NRO Account

Understanding the features and benefits before NRIs open Demat accounts is essential. An NRO Demat account allows the holder to buy/sell shares listed in the Indian stock market. NRIs can invest in companies belonging to diverse sectors, barring a few exceptions. For instance, NRIs are not allowed to invest in print media, chit funds, and a few other companies.

NRO Demat accounts offer nomination facilities to NRIs. One can nominate an individual to inherit their securities in a zero brokerage demat account Not to forget, NRIs can transfer shares, dematerialised securities, and eliminate the need for paper certificates with such an account.

One of the important features of an NRO Demat account is the non-repatriation of funds. You cannot transfer funds abroad from an NRO Demat account. You must choose an NRE (Non-Resident External) account to transfer funds abroad. NRIs must understand the different types of demat accounts before making a decision.

NRO Demat Account Opening Process

Here’s the step-by-step process to open a new NRO Demat account in India:

• Step 1: You must start by finding a reliable bank account or a broker offering NRO account services. You might be asked to apply for a NRO bank account first. You can then apply for an NRO Demat account to store securities. Finding a bank/broker to help you apply for both or a 2-in-1 account is better.
• Step 2: You can apply for a new account online or offline. In both cases, you will fill out a Demat account opening form. You must provide some basic personal details to the broker/bank.
• Step 3: The bank/broker will ask for KYC (Know Your Customer) documents after providing the basic details. You must provide a copy of your address proof, PAN card, passport, PIS approval form, and other documents.
• Step 4: The bank or the broker might take some time to verify your passport, PIS approval form, and other documents. Once the verification is successful, the bank/broker will provide the account credentials.
• Step 5: You can use the credentials to access your NRO Demat account. You can view your shares anytime, even when you are far away from India.

Besides applying for a new NRO Demat account, one can convert their existing accounts. One can change their existing bank account into the NRE/NRO account before leaving India.

Recommended Read: What Is NRE Account?

What Documents are Required to Open an NRO Demat Account?

You must complete the KYC verification process to open an NRO demat account in your name. You must submit these documents to the broker/bank for verification:

• You must provide proof of identity to open a new demat account. You can provide a copy of your passport, OCI (Overseas Citizen of India) card, driver’s license, or any other document to prove your identity.
• You must provide proof of address to show that you reside outside India
• Brokers might ask for a PIS (Portfolio Investment Scheme) approval form to apply for a new Demat account
• PAN (Permanent Account Number) card is mandatory for opening a Demat account and investing in India
• You might be asked to provide an FCD (Foreign Currency Declaration) form. It helps the broker/bank to understand the source of your income which will be invested.

NRO Demat Account Charges?

Here are the NRO Demat account charges you must know:

• The broker/bank might ask for NRO Demat account opening charges. The opening charge will be a one-time fee.
• You must pay annual maintenance charges. It is an annual fee charged by the service provider for maintaining your Demat account.
• NRIs will be subjected to GST (Goods and Services Tax) for the dematerialisation account facility.

Besides these charges, NRIs can be asked for transaction fees, custodian charges, dematerialisation/rematerialisation charges, etc.

Must Read: Demat Trading Account Fees & Charges

Conclusion

NRO Demat accounts are mandatory for NRIs who want to invest in the Indian stock market. However, these accounts do not allow the transfer of funds abroad. NRIs need to apply for NRE accounts for repatriation of funds. You must choose a reliable broker/bank and apply for an NRO Demat account online. Start investing in the Indian stock market now!