Home / Money / Personal Finance /  NRIs need a non-resident demat account

Can my NRI son buy the foreign currency of his resident country from the funds of his non-resident ordinary (NRO) account while visiting India?

—Name withheld on request


Under the exchange control law, NRO account can be debited for the purpose of local payments in India in INR, transfers to other NRO accounts or remittance of current income abroad subject to foreign exchange regulations. Remittance outside India up to $1 million per financial year is allowed out of balances held in NRO account on submission of documentary evidence and certificate from a chartered accountant in the prescribed format subject to payment of tax in India. Remittances exceeding $1 million will require special permission from the Reserve Bank of India (RBI). The operations on the NRO account should not result in the account holder making available foreign exchange to any person resident in India against reimbursement in rupees or in any other manner.


I will be moving to Canada next year. I have invested in a few mutual funds and stocks through some online apps. I would like to hold on to my units and stocks and redeem them later. For redemption purposes in the future, is it enough to just convert my registered bank account to a non-resident ordinary (NRO) account and link it to my folio? If not, what else is required?

—Kumar Chinmay


Under the exchange control law, when an individual leaves India for employment or for business or vocation outside India or for any other purpose indicating his intention to stay abroad for an uncertain period, his existing resident bank account should be designated as NRO account. You will need to open a new non-resident demat account on a repatriable or non-repatriable basis and transfer your securities from a resident demat account to a non-resident demat account.

Sonu Iyer is tax partner and people advisory services leader, EY India.

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