Repatriable Demat Account

For NRIs, investing in India is not just about earning returns; it’s about maintaining flexibility. While India offers strong opportunities across stocks, mutual funds, and IPOs, the real concern for many NRI investors is whether their money can be taken back overseas smoothly. This is where a repatriable Demat account becomes essential.

In this blog, we explain the repatriable Demat account meaning, how it differs from other Demat account types, its features, benefits, rules NRIs must know, and the exact steps to open one.

What is Repatriable Demat Account?

A Repatriable Demat Account is an electronic account designed for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to hold Indian securities such as equity shares, mutual funds, and bonds. Its key feature is that it allows the investor to repatriate the invested principal along with capital gains and dividends to their overseas bank account without limits, subject to RBI, FEMA, and applicable tax regulations.

Key Conditions for a Repatriable Demat Account

1. Linked to an NRE Bank Account: A repatriable Demat account must be linked to a Non-Resident External (NRE) account. Linking it to an NRO (Non-Resident Ordinary Account) account is not allowed if full repatriation of funds is required.

2. Investments Made Using Foreign Income: Funds used for investment must come from foreign income and be routed through the NRE account, either via inward remittance or transfer from another NRE/FCNR account.

3. PIS Approval for Equity Investments: To invest in equity shares (stocks) on a repatriable basis, NRIs need Portfolio Investment Scheme (PIS) approval, usually arranged by the bank holding the NRE account.

Regular Demat Account (For Residents)

A regular Demat account is designed for resident Indians. While it allows electronic holding and trading of securities, it does not permit repatriation of funds outside India.

Non-Repatriable Demat Account (For NRIs)

A non-repatriable Demat account is linked to an NRO bank account. It is used when investments are made using income earned in India, such as rent or pensions. Repatriation is limited and subject to RBI caps and tax clearance.

Repatriable vs Non-Repatriable Demat Account: Quick Comparison

Key Features of an NRI Repatriable Demat Account

Here are some of the key features of the NRI repatriable Demat account:

• Linked to NRE Account: All funds must originate from a Non-Resident External (NRE) account to retain full repatriability.
• PIS Requirement for Stocks: To trade in direct equity shares, NRIs generally require a Portfolio Investment Scheme (PIS) approval from the RBI.

Note: Many leading brokers now offer a Non-PIS Repatriable route, which allows you to invest without the bank's PIS letter, making account opening faster. However, traditional PIS is still widely used by major banks.

• Delivery-Based Trading Only: NRIs are restricted to delivery-based trades and cannot engage in intraday or day trading.
• T+1 Settlement Cycle: Stocks purchased are credited to the Demat account the next trading day, after which they can be sold.
• Automatic TDS Deduction: To ensure tax compliance, brokers/banks automatically deduct Tax at Source (TDS) on your profits before the money reaches your bank account.
• Short Term Capital Gains (STCG): 20% (20% + 4% cess)
• Long Term Capital Gains (LTCG): 12.5% (on gains above ₹1.25 Lakh)
• No Short-Selling: NRIs can only sell securities held in their Demat account; selling shares not owned is prohibited.

How to Open a Repatriable Demat Account?

If you’re planning to open Demat account as an NRI, follow these steps:

Step 1: Confirm Your Residential Status

Determine whether you are an NRI or an OCI.

Note: Most NRIs are not required to have an Aadhaar. If your PAN is marked “Inoperative,” it is usually because your tax status is still shown as “Resident.” Updating your residential status to Non-Resident on the Income Tax portal reactivates the PAN without linking Aadhaar.

Step 2: Open an NRE Bank Account & Select the Investment Route

A Non-Resident External (NRE) bank account is mandatory to maintain repatriability. You can choose between two routes:

• PIS Route (Traditional): Required for trading in equity shares through most major banks. The bank issues a PIS Permission Letter.
• Non-PIS Route (Modern): Offered by several brokers, allowing investment without a PIS letter. This route is faster, involves less reporting, and often has lower charges. Confirm with your broker whether NRE Non-PIS accounts are supported.

Note: The Non-PIS route now also allows intraday trading and Futures & Options (F&O) for NRIs when using NRO funds, offering greater trading flexibility than earlier years.

Important: Only one PIS-designated bank account is allowed at a time. Switching banks requires closing the existing PIS account before opening a new one.

Step 3: Select a SEBI-Registered NRI Broker

Choose a broker specialising in NRI services. A 3-in-1 account (Bank + Demat + Trading) simplifies fund transfers and account management.

Step 4: Complete Video KYC

Under SEBI’s 2025 guidelines, the Video Customer Identification Process (V-CIP) allows account verification from anywhere in the world.

• Requirements: Passport, PAN card, and a blank white paper for a live signature.
• Procedure: Ensure a stable internet connection. The broker’s app will geotag your GPS coordinates. Do not use a VPN during this process, as the system will block connections from masked IP addresses to prevent fraud.

Note: While Video KYC is standard, some legacy institutions may still request attested documents via the Indian Embassy or a Notary.

Step 5: E-Sign & Activate Your Account

Once verification is complete, e-sign the application using an OTP sent to your registered mobile/email. Account activation typically occurs within 3–5 business days.

Mandatory Document Checklist

Before you start, have digital scans of these ready:

• Passport: First and last pages (Mandatory).
• Valid Visa: Work permit, Resident permit, or OCI Card.
• Overseas Address Proof: Utility bill, foreign bank statement, or driving license (not older than 2 months).
• PAN Card: Ensure the photo is clear.
• NRE Bank Proof: A cancelled cheque showing your name and the NRE account number.
• FATCA/CRS Declaration: A simple form (provided by the broker) declaring your tax residency abroad.

USA & Canada NRI Restrictions (Important Note)

NRIs residing in the USA or Canada may face restrictions, as many Indian brokers and mutual fund houses limit access due to FATCA and compliance requirements. Always confirm eligibility before opening an account.

Benefits of a Repatriable Demat Account

Here are some of the benefits of a repatriable Demat account:

• Unlimited Repatriation: Unlike NRO accounts (capped at $1M/year), there is no upper limit on moving your principal and interest back to your country of residence from an NRE account.
• Tax-Free Bank Interest: While you pay tax on stock market gains, any interest earned on the cash sitting in your linked NRE bank account is 100% tax-free in India.
• Currency Diversification: It allows you to hold assets in one of the world’s fastest-growing currencies (INR). If the Rupee strengthens against your home currency, your effective returns increase.
• Access to High-Growth Sectors: Participate directly in India's booming digital, infrastructure, and green energy sectors through IPOs and Equities.
• Regulatory Peace of Mind: Because these accounts are strictly governed by RBI, SEBI, and FEMA, your rights as an international investor are legally protected.
• Estate Planning: Modern repatriable accounts allow you to add Nominees (even resident Indians), ensuring your Indian wealth is easily transferable to your loved ones.

Conclusion

A repatriable Demat account is ideal for NRIs who want to invest in Indian markets using foreign income while retaining full control over fund repatriation. By understanding the PIS requirement, trading restrictions, taxation, and compliance rules, investors can avoid costly mistakes and invest with confidence.

If global flexibility matters to you, this Demat account type, repatriable by design, offers the right balance of opportunity and control.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult authorised advisors for personalised guidance.