Demat account for NRIs: basics to know before referring

Friends and relatives living abroad sometimes ask how they can invest in Indian shares. Non-resident Indians (NRIs) can invest, but the process is different from a resident account. If you are asked, it helps to know the basics, and to know when your campaign does not apply.

Why NRIs need a different setup

Indian rules treat money and investments of non-residents differently from residents. So an NRI cannot simply continue using a regular resident demat and bank account after moving abroad. Accounts generally need to be converted or reopened under NRI categories.

The bank account part

NRIs usually invest through special bank accounts:

• NRE account: for income earned abroad, with funds that are generally repatriable.
• NRO account: for income earned in India, such as rent or dividends, with more restrictions on repatriation.

The demat and trading accounts are linked to one of these, depending on how the investments are made.

The PIS concept

For buying listed shares on a repatriable basis, NRIs have traditionally needed a Portfolio Investment Scheme (PIS) permission through their bank. Rules and processes have evolved over time, so NRIs should check the current requirements with their bank and broker.

Documents typically required

• Passport and visa or residence proof abroad
• Overseas address proof
• PAN card
• NRE or NRO bank account details
• Photographs and signatures
• Sometimes attested copies, depending on the broker

The process is often more paperwork-heavy than a resident account and may not be fully online.

Restrictions to be aware of

NRIs face certain limits, for example on some types of trading. Intraday trading in equities has been restricted for NRIs under many setups. These details change, so the official broker page is the right reference.

Are NRIs eligible for referral campaigns?

Most demat referral campaigns are designed for resident individuals opening standard accounts online. NRI accounts are often excluded. Before sharing your link, check the campaign rules. If NRIs are not included, say so honestly:

"This offer is for resident accounts. For an NRI account, please contact the broker's NRI desk directly."

Returning NRIs

When an NRI returns to India permanently, their NRI accounts need to be converted back to resident status. A returning NRI might then become eligible for a regular account in some cases, but if they already hold an account with the same broker, it may not count as a new customer.

Why accuracy matters

Giving wrong information on cross-border investing can cause real problems for someone, including compliance issues. Keep your role simple: share basics, point to official sources, and never guess. Encourage NRIs to consult their bank, broker or a qualified adviser.

What you can still do

Even if NRIs aren't eligible, they often have family members in India who might want an account. A friendly line keeps the door open: "If anyone at home wants to start investing, I'd be glad to help."

Summary

NRIs can invest in India, but through dedicated account types and processes. Most referral campaigns target resident customers, so check eligibility first and be clear when a campaign doesn't apply. For resident customers, start with the demat documents checklist.

Key points to remember

• NRIs need NRI-category demat and bank (NRE/NRO) accounts, not resident ones.
• The process often involves more documents and is not always fully online.
• Trading restrictions can apply; rules change, so check official sources.
• Most referral campaigns are for resident individuals only.
• When a campaign doesn't apply, say so clearly and point to the broker's NRI desk.
• Family members living in India may still be genuine customers.