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Understand the concept, usage rules, and limitations of a Non-Repatriable Demat Account for Non-Resident Indians (NRIs) in India.
For Non-Resident Indians (NRIs) looking to invest in Indian securities, there are specific regulatory pathways that govern how funds can be invested and repatriated. One such route is through a Non-Repatriable Demat Account, which allows NRIs to invest in the Indian stock market using funds that cannot be transferred back abroad. Understanding how these accounts work is essential for informed investing under the guidelines set by RBI and SEBI.
A Non-Repatriable Demat Account is a dematerialised account linked to a Non-Resident Ordinary (NRO) bank account, through which NRIs can invest in Indian stocks and other securities without the option of sending funds back to their country of residence.
It enables NRIs to invest their Indian income (e.g., rent, dividends, pension) in the stock market.
To open a Non-Repatriable Demat Account, the following criteria must be met:
You must be an NRI or a Person of Indian Origin (PIO)
Must hold an NRO bank account with an Indian bank
KYC compliance is mandatory (PAN, passport, visa, overseas address proof)
The account should be opened with a depository participant (DP) registered with NSDL or CDSL
Key details to understand about Non-Repatriable Demat Accounts include:
| Feature | Description |
|---|---|
Account Linking |
Must be linked to NRO savings account |
Investment Scope |
Allowed in stocks, mutual funds, bonds, and IPOs |
Fund Usage |
Only Indian-earned income can be used |
Repatriation |
Not allowed beyond prescribed limits |
Tax Treatment |
Income taxed as per resident Indian rates |
Joint Holding |
Permissible only with another NRI |
Investment in agricultural land or plantation property is not permitted under this account.
Non-repatriable accounts are typically used when the NRI does not intend to take funds out of India. Consider the following differences:
| Feature | Repatriable Demat Account | Non-Repatriable Demat Account |
|---|---|---|
Linked Bank Account |
NRE Account |
NRO Account |
Fund Transferability |
Funds can be transferred abroad |
Funds cannot be freely transferred abroad |
RBI Approval |
Required via Portfolio Investment Scheme (PIS) |
PIS no longer required |
Source of Funds |
Overseas income |
Indian income |
Currency Conversion |
Permitted |
Conversion allowed, but repatriation is restricted |
Follow these steps to open a Non-Repatriable Demat Account:
Open an NRO Bank Account
Visit any authorised Indian bank (HDFC, ICICI, SBI, etc.)
Submit required documents including passport, PAN, visa, and proof of overseas address
Select a Depository Participant (DP)
Choose a registered DP such as Zerodha, Groww, Angel One, etc.
Submit KYC and account opening forms
Link to NRO Account
The demat account must be connected to your NRO account
Link trading account (if any) for investment execution
Get PIS Approval (if required)
For secondary market transactions in equities, RBI’s PIS approval may be required via your bank
Start Investing
You can invest in Indian listed shares, mutual funds, bonds, and more
Certain restrictions may apply based on SEBI and RBI rules, especially for F&O trades.
| Asset Type | Allowed (Yes/No) |
|---|---|
Listed Equity Shares |
Yes |
Mutual Funds |
Yes |
Government Bonds |
Yes |
Derivatives (F&O) |
No (not permitted under standard NRO route) |
Real Estate |
Yes (except agricultural land) |
IPOs |
Yes |
Sovereign Gold Bonds |
Yes |
Consider these advantages and limitations of a Non-Repatriable Demat Account:
Enables investment of income earned in India
Easier to manage finances locally
Ideal for long-term India-based investment goals
No free repatriation of funds
Taxation and TDS applicable at source
Typical scenarios where Non-Repatriable Demat Accounts are preferred include:
Investing surplus rental income from Indian property
Parking proceeds from pensions or fixed deposits in India
Investing in mutual funds and stocks for long-term capital appreciation
A Non-Repatriable Demat Account serves as a suitable channel for NRIs who wish to invest their India-based income in domestic financial instruments. While it comes with repatriation restrictions, it offers access to a wide range of investments. For NRIs with long-term goals in India or those not intending to transfer funds abroad, this account type is both practical and tax-compliant.
This content is for informational 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.
Mutual fund investments are permitted on a non-repatriation basis using funds from an NRO account. Such investments may be held in Demat or statement form, with redemption proceeds generally restricted from being freely transferred outside India.
No, funds from a Non-Repatriable Demat Account may not be freely transferable abroad.
There is no investment cap, but income used must be sourced from India.
Yes, NRIs are allowed to open and operate both types of accounts simultaneously with separate NRE and NRO bank accounts.
Repatriable funds can be freely transferred from India to another country, subject to regulations. Non-repatriable funds cannot be taken abroad and must be used or retained within India, except where limited transfers are permitted under specific rules.
Non-repatriation means funds are restricted from being transferred outside India. Such amounts must remain within the country and are governed by regulations that limit overseas movement, commonly applying to certain investments and bank accounts held by non-residents.
An NRE account is fully repatriable, allowing both principal and interest to be transferred abroad without restrictions. It is designed for non-residents to hold foreign earnings in India while retaining the flexibility to move funds overseas.
A non-repatriable bank account is an account from which funds cannot be freely transferred outside India. These accounts are typically used for income earned within India and are subject to regulatory limits on overseas remittances.
A non-repatriable Demat account is an account held by an NRI where the funds invested and proceeds earned cannot be freely transferred outside India, except within limits and conditions prescribed under applicable foreign exchange regulations.
The repatriation status of a Demat account is determined by the linked bank account and account type selected at the time of opening. Account opening documents and bank records clearly specify whether repatriation is permitted.
A repatriable NRI account allows eligible funds and investment proceeds to be transferred abroad, while a non-repatriable account restricts overseas transfers, subject to regulatory limits and conditions applicable under Indian foreign exchange rules.
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