A Comprehensive Guide to NRI Investments in India

A Non-resident Indian (NRI) can invest in Indian stock markets. However, they have to follow certain specific regulations and rules. NRIs can invest in both the primary as well as secondary market. The guidelines on NRI investments are subject to change; therefore, it is advisable to ascertain latest position, periodically. NRIs have to compulsorily trade through a share broker. It is of paramount importance that the broker is an established and financially strong firm with demonstrated integrity; this is to ensure security of the funds and investments. Private investments have huge potential. Hence, brokers with investment banking expertise are good bets, for future plans.

Basics

NRIs need to open a NRE account in a good bank. They should specifically indicate that the account would be used for stock market transactions. Approval for portfolio investment scheme is compulsory. PAN card (Permanent Account Number) issued by the Income Tax department, Passport and Visa copy with the latest immigration stamp, bank passbook copy along with the manager’s certificate, utilities bill, and photographs are some of the documents required. Paper work related to NRI investments like any other documentation requires some help of a person with practice.

Take Away

NRIs can opt for repatriable or non- repatriable account. Repatriable basis allows the investor to take away the principal and profits. The preference should be indicated in advance and funds should be brought in through approved channels. Applicable tax has to be paid. investment banking has separate limits and rules.

Trading Formalities

Buy and sell orders are settled separately and independent of each other. There should be a gap of one day between the buy and sell order. This means that a stock bought on Monday can be sold on Wednesday only. Day trading is not allowed. There are limits on NRI investments in each company. Before trading in a stock, it is necessary to ascertain whether it is open to NRI investment.