NRI’s are always allured to invest in Indian stock market. NRI investment brings lots of money in our Indian. Non resident Indians are responsible for the growth of Indian economy and they form the major portion of what is known as Foreign Direct Investment in India. A person who is living for more than 6 months outside India in some other country is considered to be as Non resident Indian and have the rights to invest in Indian stock market as a NRI. NRI’s see a lot of potential in Indian economy and they feel that there are bright chances for them to earn lots of money by investing in Indian stock market.
There are several steps which need to be followed by NRI’s in order to invest in Indian stock market. The steps can be described as:
a) NRI should have a saving bank account with some authorized dealer or with some designated bank which is being approved by the Reserve Bank of India for doing investment in Indian stock market.
b) After opening an account an NRI should apply for the general approval from designated branch of some known bank in India for doing investment in Indian stock market.
c) Demat Account of an NRI should be opened in order to hold his stocks with the particular depositary participant.
d) An NRI should get registered with some authorised broker in India who will help him in executing the sell and buy exercise of stocks. An NRI can have as many brokers he wants but the condition is the broker should be nominated in India. An NRI should find such a broker who is able to conduct transparent trade for him.
There are certain things which an NRI needs to keep in mind while doing investments in India can be listed as:
a) An NRI cannot exceed the limit of 5% paid up value of shares while buying the shares of any particular Company.
b) NRI should thoroughly study the guidelines of Reserve Bank of India while doing investment in Indian stock market.
c) NRI’s have to follow all the policies of RBI in order to plan his investment in a right manner.
NRI’s need to submit the copy of their passport with the relevant pages included in that which should have the name, photograph and Date of birth of that NRI while opening a bank account which is a proof of that NRI which bank needs to have in order to be on the safer side in case of fraud done by that NRI. An NRI should also mention his permanent address of the country in which he is living. In case he does not have the permanent address he should give the correspondence address of overseas in order to bank wants to contact him in case of any urgency.
All the investments done by NRI’s should be in our local currency i.e. Rupee. NRI’s are supposed to deal with only one bank at a time. NRI’s are not supposed to do intraday trading in our Indian stock market; they can trade on stocks which are taken by them on delivery basis. NRI’s are not allowed to buy the stock today and sell the same stock next following day. NRI’s should have enough money to buy the stocks he wants to buy because no liberty will be given to them if they don’t have sufficient money but want to buy stocks.
In order to conclude this article we can say that, investment done by NRI’s in Indian stock market is an important concern for Indian economy as this foreign investment by NRI’s have a given a good economic boost to our developing Indian economy. NRI’s have brought a revolution in our Indian economy with the advancement of technology and up gradation of existing methods which is helping the domestic companies to improve their standards of quality in order to come in competition. Reserve Bank of India should also take some extra measures in order to loosening the policies regarding foreign investment in order to welcome and allure more NRI’s to invest in our Indian stock market for the quick growth of our economy.