Repatriable Demat Account

A repatriable demat account is an important gateway for Non-Resident Indians (NRIs) to invest in India’s capital markets while retaining the ability to move funds back to their country of residence. It serves both as a regulatory and transactional tool under India's foreign exchange and securities laws.

Investing in Indian equities, bonds, and mutual funds has become increasingly accessible for NRIs, thanks to technological advancements and regulatory frameworks laid out by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). However, understanding how a repatriable demat account functions is key to ensuring compliance and optimising financial planning. This guide covers everything you need to know—from account eligibility and documentation to its working, associated charges, benefits, and limitations.

A repatriable demat account is a dematerialised account that allows NRIs to hold and trade Indian securities while permitting the repatriation of both principal and profits to a foreign country, subject to RBI regulations.

This type of account is primarily linked with an NRE (Non-Resident External) bank account, and all transactions must comply with the Foreign Exchange Management Act (FEMA). It is one of the two types of demat accounts available to NRIs—the other being non-repatriable demat accounts, which are linked to NRO (Non-Resident Ordinary) accounts.

Understanding its key features helps in using this account effectively:

• Regulatory Compliance: Mandatorily follows RBI and SEBI norms for NRI participation.
  

• Linked to NRE Account: Funds are sourced and credited to an NRE account.
  

• Repatriation-Enabled: Profits from the sale of securities, dividends, and interest can be freely repatriated.
  

• Eligible Securities: Includes equities, bonds, debentures, government securities, and ETFs.
  

• Digital Monitoring: Most brokers offer real-time tracking, digital statements, and mobile-based access.
  

• Taxation: Gains are subject to capital gains tax, but DTAA (Double Taxation Avoidance Agreement) may provide relief.

This account is designed for individuals classified as NRIs under FEMA. An NRI is defined as an Indian citizen who resides outside India for employment, business, or any other purpose indicating an indefinite stay abroad.

Eligibility criteria:

To open a demat account as a Non-Resident Indian (NRI), you must meet the following conditions:

• Must be an NRI or Person of Indian Origin (PIO).
  

• Should hold an active NRE bank account.
  

• Should not be residing in India for more than 182 days in a financial year.
  

• A valid Permanent Account Number (PAN) card is required.
  

• Must receive PIS (Portfolio Investment Scheme) approval through an RBI-authorised bank if investing in listed shares.
  

Joint accounts are typically allowed only with another NRI, not with a resident Indian, for compliance reasons.

The functioning of a repatriable demat account involves multiple regulated entities and processes. Here's a simplified breakdown:

1. Banking Linkage: The account is connected to an NRE bank account that enables inflows of foreign currency.
   

2. Brokerage Account: The NRI must also open a trading account with a SEBI-registered broker to execute stock transactions.
   

3. PIS Approval: For equity investments, routing transactions through an RBI-approved PIS account is mandatory.
   

4. Securities Holding: Securities are held in electronic format with a Depository Participant (DP) under CDSL or NSDL.
   

5. Repatriation: Post-sale, proceeds can be transferred back abroad after deducting applicable taxes and fees.

Opening a repatriable demat account involves the following steps:

Step-by-step process:

1. Choose a SEBI-registered broker and bank offering NRI services.

2. Open a Non-Resident External (NRE) account with the partner bank.

3. Obtain PIS approval via the designated bank.

4. Fill out the demat and trading account opening forms.

5. Submit required KYC documents:

• PAN card

• Valid passport and visa

• Overseas address proof

• NRE account details
  

6. Verification and in-principle approval.

7. Account activation within 7–10 working days.

Digital onboarding is now available with some brokers, subject to jurisdiction-specific compliance.

Here’s a quick comparison between a repatriable and non repatriable demat account:

Fees and charges vary across service providers, but common components include:

• Demat Opening Fee: One-time setup cost.
  

• Annual Maintenance Charge (AMC): Typically INR 300–800 annually.
  

• Transaction Fee: Charged per buy/sell transaction.
  

• Custodian Fee: May apply for holding certain securities.
  

• PIS Bank Charges: Incurred for PIS compliance and reporting.

It is advisable to compare fee structures and understand hidden costs when selecting a provider.

RBI and SEBI provide extensive guidelines that govern NRI investments:

• RBI Circular: Investment under PIS should be routed through designated bank branches only.
  

• Repatriation Cap: The limit on repatriable investments in Indian companies is 10% of their paid-up capital, extendable to 24% via special resolutions.
  

• Tax Reporting: Brokers must deduct TDS (Tax Deducted at Source) and report income to the IT department.

Always refer to RBI Master Directions and SEBI Circulars for the latest norms.

This account offers several functional and strategic advantages such as:

• Legal Participation: Compliant method to invest in Indian equities.
  

• Repatriation Flexibility: Full repatriation of earnings subject to regulations.
  

• Diversification: Access to a wide array of financial instruments.
  

• Digital Convenience: Manage investments from anywhere globally.
  

• Transparent Reporting: Clear audit trail and portfolio tracking.

Despite the benefits, users must account for certain constraints:

• Regulatory Limits: Investment limits per company apply.
  

• Compliance Load: Regular submission of reports and disclosures.
  

• Tax Treatment: Capital gains taxation and filing in India required.
  

• Restricted Securities: Cannot invest in certain sectors like chit funds or agricultural land.

Once an Indian resident becomes an NRI, they must convert their resident demat account into an NRI version. Failure to do so can lead to regulatory non-compliance and potential penalties.

NRIs cannot operate resident demat accounts legally, and holdings must be transferred to repatriable or non-repatriable accounts depending on fund source.

A repatriable demat account is an essential financial tool for NRIs who want to stay invested in India while retaining the ability to repatriate funds. It helps you remain compliant with RBI and SEBI regulations while benefiting from India’s growing financial markets. However, understanding its structure, limitations, and compliance requirements is vital before opening the account.

This content is for educational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.

• RBI Master Direction – NRIs
  

• SEBI Circular on NRI Participation
  

• NSDL – NRI Demat Services
  

• CDSL – NRI Account Information