What are NRI, NRE and NRO Trading accounts?

To save their earnings, Non Resident Indians (NRIs) can maintain an NRE or NRO account based on their circumstances. They can also maintain an NRI trading account to trade securities in the Indian stock exchanges. We elucidate the rules governing these accounts.

Samiksha Bhateja, MintGenie Team
Updated17 Mar 2022, 10:33 PM IST
NRIs can also maintain an NRI trading account to trade securities in the Indian stock exchanges.
NRIs can also maintain an NRI trading account to trade securities in the Indian stock exchanges.(Photo by Tezos on Unsplash )

By way of the stock exchange, NRIs can purchase stocks and convertible debentures of domestic companies. On either repatriation or non-repatriation basis, such investments can be undertaken through the Portfolio Investment NRI Scheme (PINS).

It is required by RBI standards for NRIs to create a trading account with a designated RBI-authorised institution. Their investments must be routed through either a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account.

What are the types?

PINS Account

This account enables the purchase and sale of stocks on the Indian stock markets, as there are two types of NRE PINS accounts: NRE and NRO. Money can be repatriated to other nations using NRE PINS. As an alternative, funds cannot be repatriated from an NRO PINS account.

NON-PINS Account

As a resident, you can utilise this type of account to invest in Initial Public Offerings (IPOs) or mutual funds. Once again, this is categorised as a non-PINS account for NRE and NRO. While NRE transactions can be repatriated, those done through NRO cannot be.

As with an NRE account, a PINS account functions similarly. When dealing with equities, even if an NRI has an NRE account, they must have a separate PINS account. Users should keep in mind that an NRI can only have one PINS account at any given time.

Now that NRIs can engage in equity through the RBI, additional products are being offered to suit the increased demand. Investing in Indian stock markets is easier for NRIs thanks to the variety of trading accounts available.

What is an NRO trading account?

NRIs (non-resident Indians) living outside of India have found India to be a lucrative investment prospect. According to the Foreign Exchange Management Act, NRIs are people of Indian descent who move overseas for work. To trade or invest in India's stock market, NRIs must have a Demat account.

What are the benefits of an NRO trading account?

The Indian stock market is accessible to NRIs from anywhere in the world. For transactions, a large portion of the physical documentation procedure has been removed.

Depository transactions occur quickly and efficiently, and the results are instantly reflected in the Depository. Transactions with the NRI Demat account carry a limited risk of physical documents loss, forgery, delayed delivery, and other such difficulties.

The NRI Demat account has a minimum holding of one share. Your portfolio can be diversified through the use of ETFs, mutual funds, convertible debentures or other investment vehicles.

How to open an NRO trading account?

If you choose to open an account in person, you will need to get a form to fill out, attach the relevant papers, and then submit it.

This means that you must have a PAN card and an NRO account as well as a letter of permission from the RBI for Portfolio Investment Scheme (PIS) before you may open. They also require an ID photo with a signature on it, copies of PAN, VISA, and passports, as well as a cancelled cheque from the NRO/NRE bank accounts. A notary or Indian Embassy in the nation where the NRI presently resides must sign all documents.

It's up to you to complete your homework and register an NRO account. You can also open an NRE account, which offers perks such as tax exemption on interest earned and repatriation benefits for both interest and principle.

Investors can invest in practically all sectors after their accounts are set up, with the exception of chit fund businesses, print media, plantation-owned properties (other than real estate development), transferable development rights, gains on shares held less than a year are taxed at 15.45 per cent. Stocks that have been held for more than a year will be free from the capital gains tax.

What is an NRE trading account?

In order to save their overseas earnings in Indian currency, Indian residents living abroad must open a Non-Resident External (NRE) rupee account first. It is essential that NRIs open a bank account where their foreign currency earnings are converted and saved in the Indian rupee (INR).

One thing to keep in mind is that money earned within the country of India cannot be placed into such NRE accounts. It is possible for non-resident Indians (NRIs) to simply save their earnings in this account, invest them in term deposits, and even designate a power of attorney if they have a family dependent on them at home.

What are the advantages of the NRE trading account?

Full Repatriability

Foreign currency earnings can be repatriated into Indian Rupee NRE accounts. As a result of this benefit, NRIs can deposit money into their accounts without having to worry about currency conversion. These perks allow NRIs to meet the financial needs of their dependent family members in India.

Multiple account holding benefit

For non-resident Indians, there are no restrictions on the number of NRE accounts they can hold. Consequently, individuals might maintain many such accounts with different banks to earn higher returns on deposits, or to secure remittance to cover all domestic costs.

Convenient maintenance

People who do not live in India can appoint a local as a power of attorney holder who can administer the account, allowing them to withdraw money. With power of attorney, one can perform any necessary changes for the account's smooth administration, save for opening and closing it.


Due to the fact that cash can be transferred to and from an NRE account, capital market operations such as buying and selling shares are made easier.

Tax benefits

The principle and interest components of an NRE account are exempt from taxation. While the principal portion of the loan is exempt from taxation according to the Double Taxation Avoidance Agreement, tax exemptions on interest are meant to increase the country's foreign exchange reserves by inducing NRIs to keep money in their NRE accounts.

What are the limitations of the NRE Account?

An NRI's money cannot be deposited in these accounts, which is a major drawback. Despite the many advantages of NRE accounts, NRIs must choose an NRO account in order to save their Indian earnings.

An NRE account can't be used to save in foreign currency, either, because the money is converted to INR from the foreign currency when it's deposited. If you're an NRI and wish to keep a portion of your earnings in foreign currency, you'll need to open an FCNR (foreign currency non-resident) account.

Before opening a bank account or making a deposit, it's important to be aware of the numerous rules and regulations that govern financial accounts and check the various interest rates offered to NRIs, and make sure to choose the correct type of account for themselves.

There are three ways through which you can invest in Indian equities if you're a NRI.
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First Published:17 Mar 2022, 10:33 PM IST
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