In recent years, NRI trading has gained popularity as more and more NRIs invest in the Indian market. If you are an NRI looking to trade or invest in Indian stock , then you have come to the right place. This article serves as an important guide to understand everything about NRI trading in India such as who is an NRI, types of NRI trading accounts, NRO vs NRE account, NRI trading rules and regulations, trading restrictions for NRIs when investing in India, and much more!
Before we proceed, let’s first understand whether you qualify as an NRI or not.
Non-Resident Indian (NRI)
As per the Income Tax and Foreign Exchange Management Act (FEMA) guidelines, an Indian citizen who resides overseas or abroad for at least 183 days or more in a financial year, is known as a non-resident Indian or NRI.
NRI can stay abroad for any reason be it business, education, employment, or other.
Can NRI invest in India?
As an NRI, you may be asking yourself whether you are allowed to invest in companies listed on the BSE and NSE or not. The answer is clearly “yes."
As per SEBI regulations, NRIs are allowed to invest in equities, mutual funds, government securities, treasury bills and IPOs and also trade in equity futures and options.
But again, the question arises: why should NRIs invest in India?
Over the past few decades, India has emerged as one of the fastest-growing economies in the world with an average annual GDP of 6.5-7%.
Therefore, investing in India is proving to be a rewarding opportunity for NRIs. They help NRIs not only to diversify their investments geographically but also to diversify their portfolio across various instruments such as equities, bonds, stocks and even across various sectors and industries.
Types of NRI Trading Accounts
To trade or invest in Indian stock exchanges, NRIs have to open NRI trading and demat accounts in India. It can be opened with any discount broker or full-service broker who offers NRI trading services.
Let's discuss different types of accounts required for NRI trading;
1. NRE or NRO bank account: NRIs tempted to explore investment opportunities in India must first open an NRI bank account. As an NRI, you can open either a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) bank account.
- NRE Bank Account: NRIs who are earning money in foreign currency but want to remit it in the Indian currency Rupee should open an NRE account in India. NRI can use the funds from NRE account to invest it in the Indian companies. All deposits or fund balances from the NRE account can be repatriated or transferred to abroad.
- NRO Bank Account: If an NRI want to manage the income earned in India can open an NRO savings bank account. NRIs are Indian citizens thus, any income received in the form of rent, pension, business income, dividend, etc. in Indian currency should be deposited to an NRO account. Unlike NRE, NRO account balance and interest is not fully repatriable, an NRI can repatriate maximum of USD 1 million in a financial year.
Know more on NRE Vs NRO Account
Once you open an NRI bank account, you can choose to invest in India through PIS (Portfolio Investment Scheme) or through PIS. PIS is an RBI scheme that allows NRIs to invest in listed Indian companies on the BSE and NSE. RBI has authorized certain banks to provide the PIS letter to NRIs. All transactions processed through the NRI PIS account will be reported to the RBI.
NRIs are even allowed to invest in India using non-PIS NRO trading account thus PIS is not mandatory and NRIs can even trade without PMS.
2. NRI Trading Account: Trading account acts same for residents and non-residents as it is used to place and execute buy and sell orders. With an NRI trading account, they can buy and sell stocks listed on BSE and NSE, F&O contracts, or invest in mutual funds.
As an NRI, you can link either an NRE or NRO bank account to your trading account to invest on a repatriation or non-repatriation basis.
3. NRI Demat Account: The demat account is opened by NRI to receive delivery of shares and securities in dematerialized form. In this way, all equity and mutual fund investments held by NRI will be safely kept in the NRI Demat Account.
NRI 2-in-1 Vs NRI 3-in-1 Account
Oopening an NRI trading account is the first requirement to invest in Indian market.
NRI 2-in-1 account: An NRI 2-in-1 account combines NRI trading and NRI Demat account. Top discount brokers in India who are not part of any banking house like Zerodha, Angel One, Fyers, Prostocks, etc. avail NRIs to open a 2-in-1 account.
Although these banks partner with RBI-authorized banks to help NRIs to get PIS permission letter.
NRI 3-in-1 account: It is an integrated platform that combines 3 different accounts; NRI Trading Account, NRI Demat Account, and NRE/NRO Bank Account. The most important benefit of having a 3-in-1 NRI account is it allows seamless fund transfer between NRI trading and bank account.
Full-service brokers like ICICI Direct and HDFC Securities provide 3-in-1 account opening facility to NRIs.
Best Brokers for NRI Trading
There are many discount and full-service stock brokers offering NRI trading services, but among all it is difficult to find the best NRI trading broker.
NRI discount brokers like Zerodha, Prostocks, Fyers, etc. offer 2-in-1 account and fees flat brokerage fees from NRI clients. Full-service brokers, on the other hand, allow NRIs to open an integrated NRI 3-in-1 account and also offer value-added services such as PMS, research, and advisory services, but charge a fixed percentage of the trade value as brokerage fee.
Want to know the best NRI trading accounts in India? Here is a list of the best brokers for NRI account openings. These brokers are recommended because of the cheapest NRI brokerage fees, zero NRI demat AMC account, diverse investment offerings (stocks, F&O, mutual funds, etc.), and dedicated NRI customer service.
NRI Trading and Investment Products
- Equity: Invest in companies (delivery trading) listed on NSE and BSE
- Equity F&O: NRIs can trade in the equity derivatives segment using the NRO account only.
- Mutual Funds: NRI can purchase and redeem units of domestic mutual funds.
- Initial Public Offering: NRI can participate in the primary market too by applying for IPOs.
- Government securities
- Treasury bills (T-bills)
- Listed non-convertible preference shares and debentures
- National Pension Scheme (NPS)
NRI Trading Process Explained
The NRI trading process is somewhat similar to the trading and investing done by an India-based investor. Learn how NRI trading works in India in simple steps;
1. Open NRI Trading Account
To get started with NRI trading, the first step is to open an NRI trading and demat account with a stock broker in India. NRIs can link either an NRE or an NRO account to their trading account to transfer and withdraw funds. They can also choose to invest through PIS or not through PIS by mapping an NRO bank account.
2. Transfer Funds
Once you have opened a PIS account, you will need to transfer funds from your NRE or NRO bank account to the PIS account. Your bank will notify your broker of the PIS account balance, which will then be updated as a trading limit or margin in your NRI trading account.
However, if you do not have PIS NRO account, you can deposit the money directly to your trading account through a payment gateway, IMPS, NEFT or RTGS.
3. Place buy or sell order
Place buy or sell orders by logging into your NRI trading account on the mobile app or desktop or web platform. If your NRI account has sufficient funds, your order will be executed.
In case of PIS account, a contract note will be sent by the broker to the respective bank to transfer the funds. When an NRI sells shares from his demat account, his bank account (NRE or NRO) is credited with the net balance after deducting TDS. Settlement of shares will be done within T+1 days.
NRI Trading Rules and Regulations
- Although NRIs are allowed to invest in Indian equities, their investment is subject to a maximum cap. As per SEBI rules, an NRI can invest a maximum 5% of company’s paid-up capital on a repatriation (NRE) or non-repatriation (NRO) basis.
- NRI can trade in F&O using NRO account only, and a custodial participant (CP) code is also required.
- Investments in India by NRIs are subject to TDS.
- NRIs cannot have more than 10% investment in shares of an Indian company. This means, the maximum NRI investment in Indian equities is restricted to 10% of company’s total paid-up capital.
- NRIs are not allowed to invest in certain sectors like gambling, lottery business, real-estate business, chit fund business, manufacturing of tobacco, cigarettes, and other tobacco products.
NRI Trading Restrictions
NRIs have certain trading restrictions, here is a list;
- Buy today, sell tomorrow or short selling is not allowed for NRIs.
- NRI cannot do intraday (MIS) trading.
- NRIs cannot trade in commodity derivatives.
- NRIs cannot participate in currency derivative trading.
- NRI can sell shares only after receiving its delivery into their Demat account.
- NRI can have only one PIS account.
- NRIs are barred from trading in banned stocks.
- NRI trading in stocks under caution list requires RBI approval.

