Comment on NRI trading on Indian Stock Exchanges

Renuka commented on 20 Feb 2016, 10:03 PM

please see the reply i got from ICICI direct regarding investing in Indian mutual funds for an NRI in USA, it clearly says that NRIs based out of USA are not allowed to directly invest in the mutual funds/shares in Indian companies. your reply to others seems to indicate it is perfectly legal to do so. Can you please elaborate and clarify?

Renuka

Dear Mr. Prasad,

We understand your concern.

With reference to your e-mail, this is to inform you that the demat accounts are opened as per residential status and an investor can open an NRI Demat / Trading Account if he is staying abroad for more than 182 days. The resident Demat Account if any, cannot be transferred to NRI Demat Account however, the new Demat Account can be opened by closing the existing Demat Account under resident status and transferring shares to newly opened Demat Account under NRI status.

If your status is NRI, it is preferable to trade through an NRI Demat Account as it may lead to tax issues and legal bottlenecks (SEBI & RBI Regulations) on a future date.

However, it is mandatory for a NRI customer to trade in the secondary market only through a PINS designated Account. NRI customer needs to obtain the RBI PINS approval from an authorized dealer (ICICI Bank) before he transacts in the secondary market. All such transactions need to be reported by the bank to RBI on daily basis.

Further, as per the regulatory guidelines if your status has been change from Resident Indian to NRI then you need to have the NRI Demat and Trading Account. However you will not be able to convert your existing Resident Indian Demat and Trading Account into NRI status through online process due to the reason you are staying in USA. Kindly check the below mentioned details regarding why you will not be able to convert your Account through online.

ICICI provides you with the unique facility of a 3 in 1 Account consisting of a Demat, Savings and Trading Account. This Account helps you in buying and selling shares in the Indian stock market through our portal www.icicidirect.com for NRI customers. However, we would be unable to open Investment Account for USA customer as per process.

The United States Securities Exchange Commission (SEC) Rules, requires federal as well as state-wise registration of issuers of securities. This means that if a California resident wants to trade in a scrip (say Reliance Industries), the scrip itself should be registered with SEC and the state that the customer resides in i.e. California. Since, Indian shares are not registered with SEC and the different states, as per SEC rules, they are not eligible to be offered to US residents.

Hence, ICICI Group (i.e. ICICI Bank Demat services and ICICI Securities) do not offer depository/broking services to US residents online.

However, we can offer NRI Trading Account to you when you visit to India. You need to visit nearest ICICI Direct Center for getting NRI Trading Account opened.

The list of centers may be searched form the link: https://secure.icicidirect.com/IDirectTrading/customer/customeroverview.aspx

We look forward to more opportunities to be of service to you.

Sincerely,

Customer Service Officer
ICICI Securities Limited

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