|Non-Resident Indian (NRI)’ means a person resident outside India who is a citizen of India or is a person of Indian origin.|
Categories of NRIs:
A person who has gone out of India or who stays outside India, in either case-
The Overseas Citizenship of India (OCI) Scheme was introduced by amending the Citizenship Act, 1955 in August 2005. The Scheme provides for registration as Overseas Citizen of India (OCI) of all Persons of Indian Origin (PIOs) who were citizens of India on 26th January, 1950 or thereafter or were eligible to become citizens of India on 26th January, 1950 except who is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may, by notification in the Official Gazette, specify.
- India is a member of BRIC’s, and Growth potential of BRIC countries is much higher compared to developed countries.
- India is still expected to have growth rate of at least 8% YOY, much higher than any developed country.
- The key strength of the economy is huge Domestic consumption & not total dependence on Export. That makes India unique investment opportunity independent of economies in developed world.
- Decline in Valuation of strong companies is much sharper then profitability of the companies which makes it attractive for mid to Long term investment. Attractive P/E valuation at current levels.
- Advanced yet conservative and more controlled financial system result in Low risk & stable financial system.
- Domestic saving ratio is more than 30% of the GDP means high savings habits.
- Progressive policies of Indian Government towards NRI investments makes, it attractive investment opportunity especially for NRI community.
- Repatriation of Money is much easier now than ever before
NRIs are allowed to invest in Indian stock market under the Portfolio Investment Scheme and through NRO non PIS accounts -through the secondary market.
There are two types of NRI Demat Accounts NRIs can invest in –
- Repatriable investment NRI Demat Account:- This is a type of account for remittance outside India. This account allows you to hold and trade in any securities (Equity, Debt, Mutual Funds etc.) purchased in India, in any currency other than the Indian Rupee.
- Non-repatriable investment NRI DEMAT Account:- This type of account does not allow the investor to transfer or repatriate any funds outside India, and the funds and investments remain within India.
When NRIs indicate their new non-residential status to their banks, the banks provide them with a non-resident ordinary (or NRO) account. If you had a pre-existing Demat account in place prior to becoming an NRI, the shares and securities listed under it would now move to your new NRO account. Opening a Demat account online is easy and requires no effort.
The NRO Demat account can be used to make sell or hold decisions pertaining to existing shares as well as buy decisions pertaining to new shares listed on the Indian stock markets that you might have your eye on.
Nonresidential Indians are entitled to invest in companies listed under almost all sectors barring those engaged in the realms of print media, chit fund, agriculture, plantation, and real estate. Additionally, trades made on development rights that are transferable are not permitted
Some of the many NRO account benefits are as follows-
1. Capital gains are exempt in the event that Nonresidential Indian shareholders decide to hold their shares for more than a year.
2. Should Non-residential Indians choose to hold on to shares for a year or under, they are required to pay a capital gains tax applicable at 15.45%.
Before an NRI can proceed with opening of his/her DEMAT Account, he/she is required to submit relevant documents for KYC purposes. These documents act as a proof of evidence for identity and nationality of the individual. The documents required for processing an NRI Demat Account are:-
- Valid Indian Passport/PIO Card
- PAN Card
- Residence Status of Proof (Visa, Work Permit, Resident Card)
- Overseas Address Proof ( Driver’s License, Electricity or Telephone Bill)
- Indian Address Proof (only in cases of African Nations)