NRI Trading Charges Explained (Brokerage, AMC, PIS, Demat) (2024)

Published on Tuesday, August 27, 2019 by Chittorgarh.com Team | Modified on Sunday, August 9, 2020

NRIs are allowed to invest in equity, equity derivatives, IPOs, Mutual Funds, and bonds in India. Learn about various NRI Trading charges associated with trading and investments in India.

To trade in BSE & NSE in India, an NRI needs multiple accounts based on the segment they choose.

1. NRI PIS Charges
2. NRI Bank Account Charges
3. NRI Trading Account Charges
4. NRI Demat Account Charges
5. NRI Custodial Account Charges

Let's understand these accounts and the various charges associated with it in detail:

NRI PIS Permission Charges

Portfolio Investment Scheme (PIS or PINS) is a scheme by RBI which enables NRIs to invest in Stocks, Equity F&O, IPOs and Mutual Funds through BSE & NSE in India. Under this scheme, all the bank transactions are required to be reported to the RBI by the bank.

NRIs can trade on both repatriation and non-repatriation basis. For investments on repatriation basis, NRIs need to open a PIS enabled NRE Bank account and route their trading and investment amount through it. For investments on non-repatriation basis, NRIs need a PIS enabled NRO bank account or NRO account (without PIS) and fund their trading and investment amount through it.

Read NRE Vs NRO account to know the difference between NRE and NRO Bank accounts.

After opening the NRI bank accounts, NRIs need to fill a form called 'Application for designating bank account for PIS' and submit it to their bank. Once approved, the requested (NRE or NRO) bank account is designated as PIS Enabled Account. All transactions from the account are reported to RBI by the bank daily. While registering for PIS, an NRI also needs to appoint a specific branch of the bank as a Designated Bank for PIS. The RBI has authorized only select branches of banks for NRI banking transactions.

An NRI Bank Account is designated as a PIS Bank Account after the PIS approval is received. These accounts also need to be linked while opening an NRI Demat and NRI Trading account.

NRIs need to pay 3 types of charges for NRI PIS Scheme-

Note: The PIS charges vary depending on the bank.

NRI Bank Account Charges

An NRI needs to open NRI Bank Account to manage money, trade and invest in India. NRI bank accounts are classified into two types:

1. Non-Resident External (NRE) account

   This account is opened with the purpose to facilitate the transfer and manage the income earned abroad to India. The account is rupee dominated account and is fully repatriable i.e. the money held in the account can be transferred to India. The interest earned from the account is tax-exempted.

2. Non-resident Ordinary (NRO) account

   This account is opened to manage income like rent, dividend and pensions, etc., earned in India and is non-repatriable. However, RBI regulations allow repatriation up to $1 million in a financial year. Interest earned on the account is fully transferable. Income earned abroad can also be deposited in this account.

Banks charge a variety of fees like debit card fees, cheque book fees, transaction fees, convenience fees etc., from NRI customers. We are not discussing these fees in detail as these fees are related to banking services and not related to trading & investments.

NRI Trading Account Charges

An NRI Trading Account is a must for NRIs to trade in Stocks, Stock Derivatives, IPOs, Mutual Funds, and Bonds at BSE and NSE.

As per the government regulations, NRIs are only permitted to trade in equity, equity Futures & Options, and Currency Derivatives. They are not permitted to do intra-day trading or trade in Commodity in India.

An NRI Trading Account can be opened with a stock broker like Zerodha, ICICI Direct, and HDFC Securities to name a few.

NRIs need to pay the following types of charges for NRI Trading Account:

NRI Demat Account Charges

The Demat Account holds securities like Stocks, Mutual Funds, IPO stocks and Bonds, etc. in electronic form. It works similar to a bank account but instead of money, it holds the securities.

An NRI Demat Account is a must for NRIs looking to trade in Indian stock exchanges. It is similar to a resident demat account in terms of account opening process, charges and the way it is managed.

An NRI Demat account attracts various charges. The fees include charges levied by the Central Depository, Depository Participant (Broker) and government taxes. Some key NRI demat account charges are:

NRI Custodial Accounts

NRI Custodial Accounts are a must for NRIs to invest in Equity Derivatives (F&O) in India. There can be an exception to this if the broker is a clearing member and the broker can clear the F&O trades for you. In such a case, you may not require to open a custodial account.

To trade in F&O, an NRI has to open an account with Custodial and get a CP code. Custodians are SEBI registered members who help the NRIs in getting the CP code and clear the F&O trades at the exchange on behalf of the NRI customers.

The funds for the F&O trading remain with the custodian. It works similarly to the funds for NRI stocks delivery trading remain with the bank and transferred to the broker once they share the contact note with bank. The funds for derivative trades are also transferred to the custodian at the end of the trading day.

All equity derivative trades of NRIs are cleared through a clearing member using the CP code. The code is also used by stock brokers to execute the F&O trades on behalf of an NRI customer. When a CP code is used, the trade obligations including payment of margin and settlement go to the Custodial.

Opening a custodial account required at least Rs 25 lakhs portfolio size including cash, stocks or any other security that you can deposit with the custodian.

NRI Trading Charges of Top 5 NRI Stock Brokers

1. Zerodha NRI Trading Charges

Zerodha is India's largest stock broker. It is a discount broker popular for its excellent online trading platforms and flat-fee brokerage.

Zerodha offers 2-in-1 NRI Account consists of a trading and a demat account. Zerodha serves only those NRIs who have their PIS accounts with Axis, HDFC or Yes Bank.

Read Zerodha NRI Account Review to know in detail about Zerodha NRI Trading services.

2. SBI NRI Trading Charges

State Bank of India is the largest bank in India. SBI NRI customers can invest online in Equities, Derivatives, IPOs, and Mutual Funds through its 4-in-1 account consisting of trading, demat, bank and PIS accounts.

Read SBI NRI Account Review to know in detail about SBI NRI Trading services.

3. HDFC NRI Trading Charges

HDFC offers a range of trading and investment services to NRIs. HDFC offers NRI 3-in-1 accounts which combine banking, broking and demat account.

Read HDFC NRI Account Review to know in detail NRI Trading services offered by HDFC.

4. ICICI NRI Trading Account Charges

ICICI Direct offers a unique 3-in-1 account integrating banking, trading and demat accounts. The account facilitates trading in a range of options including Stocks, Equity Derivatives (F&O Trading), Mutual Funds, and IPOs. In addition, ICICI also offer services related to PAN Card and Portfolio Investment Scheme (PIS) etc

Read ICICI Securities NRI Account Review to know in detail about ICICI NRI Trading services.

5. Axis Bank NRI Trading Account Charges

Axis bank offers a 4 in 1 NRI Account which facilitates online investments in equities, derivatives, IPOs, mutual funds and ETFs. Axis Bank offers a range of services to NRIs including PIS, Banking and Investments etc.

Read Axis Bank NRI Account Review to know in detail about various Axis NRI Trading services.

1. 1. What is the process to close an NRE/NRO account?

   An NRE or NRO account can be closed by submitting a closure request form to the bank or by filling up a redesignation form to convert the existing NRE/NRO account to a resident savings account or Resident Foreign Currency account.

   An NRI may want to close an existing NRE/NRO account under below 2 scenarios:

   1. To open NRE/NRO accounts in another bank
   2. On return back to India.

   Steps to close the NRE/NRO account:

   1. Download the Account closure form from the bank website.
   2. Fill up the entire form and sign it.
   3. Send the form to the bank for processing. [ You may also require to send the unused cheque leaves along with the closure form]

   For NRIs returning to India, you are required to inform the bank about the change of your residency status. The bank may ask for a declaration in writing or ask to fill up a form for the redesignation of accounts. The existing NRE/NRO account can be redesignated to a resident savings account or the NRI also has an option to convert the existing NRE account to Resident Foreign Currency Account wherein an NRI can maintain funds in foreign currency with full repatriation benefits. This may help an NRI in case his residency status changes back to NRI and the funds in the RFC account can be easily transferred to any NRE account without any issues.

   It is important to note that the process of each bank may vary a bit. Some banks may require an in-person visit to the bank for the closure process. Some banks may close the existing bank accounts and open a new savings account while some may redesignate the same accounts to resident accounts. Thus, it would be best to approach your bank for guidance to know the exact process followed at their end.

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2. 2. Can an NRI trade in his father's trading account?

   An NRI can trade using his father's trading account. However, the father would be liable to pay income tax on any gains arising from such investments.

   An NRI can transfer money to the father's bank account as a gift or loan which would be linked to the trading and Demat account. Due to online trading facilities made available by almost all brokers, an NRI can easily operate and manage father's trading and Demat accounts and trade without any complexities of getting involved in NRI Trading account opening and handling.

   Important Points to Note:

   • An NRI cannot link his bank account to the father's trading account. The bank account, Demat account, and trading account should all be in the same name.
   • Though the above approach can be used as a workaround, it is not advisable to do so to avoid any issues in the future on account of any investigations. It is always recommended to trade in the capacity of an NRI, on attaining the residency status of NRI.

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3. 3. How to open NRI trading account?

   An NRI trading account can be opened by approaching a stockbroker or banks offering 3-in-1 account services. An NRI trading account is required to place the buy/sell order with the broker.

   Documents required for opening an NRI trading account:

   1. Document about your current Status:

   • In case of an Indian passport:
     • Valid passport and
     • Place of birth as India and
     • Valid Visa - Work/Student/employment/resident permit etc.
   • In case of foreign passport: Valid passport and any of the following:
   • Place of Birth as India in the foreign passport or
   • Copy of PIO / OCI Card

   1. Copy of the PIS Permission Letter from the respective designated bank for trading on a repatriation
   2. Copy of FEMA declaration.
   3. FATCA declaration.
   4. The PIS NRE/NRO bank accounts cancelled check leaf.
   5. PAN Card.
   6. Overseas Address Proof - Driving License/ Foreign Passport /Utility Bills/Bank statement (not more than 2 months old)/Notarized copy of rent agreement/ leave & license agreement/ Sale deed.
   7. Proof of respective bank accounts & depository accounts.
   8. Account opening fee cheque.
   9. Duly signed account opening forms.

   Note:

   1. The above is a generic list of documents for reference and the requirements may vary a bit from broker to broker.
   2. The documents should be self-attested and notarized by Indian Embassy or any other competent authority like Consulate General / Notary Public / Any Court / Magistrate / Judge / Local Banker in the country where the NRI resides.

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4. 4. Can NRI do day trading?

   Day trading is the same as intraday trading and an NRI is not permitted to do day trading.

   An NRI can invest and trade only on a delivery basis i.e. an NRI is required to take the delivery of stock on T+2, T being the trading day. Only once the stock is credited to the Demat account, an NRI can place the sell order. An NRI cannot do short selling.

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5. 5. Can NRI use Demat account in India?

   An NRI can use a Demat account in India just like resident Indians to hold the securities in electronic format. A Demat account is one of the mandatory requirements for an NRI to invest in the stock market.

   An NRI is required to open a repatriable Demat account(NRE) or a non-repatriable Demat account (NRO) depending on whether an NRI is investing on repatriation or non-repatriation basis respectively.

   The Demat account is required to hold:

   1. The stocks purchased through the stock exchange in the capacity of an NRI;
   2. The shares bought in the capacity of a resident Indian;
   3. The shares applied in IPO;
   4. Bonus shares;
   5. Rights Issue; and
   6. Shares received as a gift.

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