What is a Repatriable Demat Account?

In 1996, the Securities Exchange Board of India (SEBI) introduced dematerialisation or Demat accounts in India to replace the physical certificates of shares. All of your financial securities can be electronically stored in this digital platform. Before making any investments, investors have to decide between the several kinds of Demat accounts.

The Non-Resident Indians (NRIs) can choose between a repatriable Demat account, a regular Demat account and a non-repatriable one. This blog explains what is repatriable Demat account, its features, and the differences between a Non-Resident External (NRE) and a Non-Resident Ordinary (NRO) Demat account.

What are the Different Types of Demat Accounts?

A Demat account is crucial for digitally storing the purchased securities from the securities market. It helps to maintain a record of an investor’s shares and securities. Through a Depository Participant (DP), the account holders oversee their Demat account.
However, individuals must choose between different types of Demat accounts before making any investment. There are three types of Demat accounts: a regular Demat account, a repatriable Demat account, and a non-repatriable Demat account.

What is a Regular Demat Account?

A regular Demat account is for investors residing in India. Indian citizens can buy and hold stocks, mutual funds, and other securities with the help of this regular account. Several online stock broker platforms enable investors to open a regular Demat account supported by depositories like the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL).
Investors can deal in stocks quickly using regular Demat accounts. Moreover, they can move their shares to other institutions from these types of accounts for free.

Repatriable Demat Account Meaning

The NRIs can choose between these two types of Demat accounts to make investments in India. One is a repatriable Demat account, and the other is non-repatriable. NRIs can open a repatriable Demat account by following the rules of the Foreign Exchange Management. Since a repatriable Demat account is linked to the NRE bank account, it allows investors to transfer their foreign investment income, such as dividends and interests, to their homes.
For instance, as long as they abide by the Reserve Bank of India’s (RBI) foreign exchange regulations, an NRI who invests in Indian equities using this account may sell those stocks and transfer the sale proceeds. These can be any profit they want to get back to their nation of origin.

What is a Non-Repatriable Demat Account?

The other way for an investor to invest in the Indian stock market is to open a non-repatriable Demat account. NRIs are not allowed to transfer money outside of India using this type of Demat account.
Investors who have opened a non-repatriable Demat account need to link it to their NRO savings account for it to function properly. After leaving India, investors with regular Demat accounts can switch to non-repatriable Demat accounts without losing their shares.

Features of Repatriable Demat Accounts

One of the primary benefits of a repatriable Demat account is that NRIs can take back the money earned to their home. Here are some of the other essential features of a repatriable Demat account:

1. Flexible Investments

The repatriable Demat account allows NRI investors to invest in various types of securities, like stocks, mutual funds, bonds, and ETFs. This helps them to make a diversified portfolio.

2. Compliance With RBI

Repatriable Demat account follows all the rules of regulations of the RBI and the SEBI. This shows that NRIs can make investments properly and securely.

3. Tax Obligations

Furthermore, 30% Tax Deducted at Source (TDS) is applied to the principal and interest earned on the bank account.

4. Repatriation Benefits

The RBI regulations state that the maximum amount that can be repatriated from an NRO bank account is $1 million each financial year.

How Does an NRE Demat Account Differ From an NRO Demat Account?

The major difference between an NRE Demat account and an NRO Demat account is that an NRE account allows you to transfer money abroad, while an NRO account restricts this. The table below highlights the differences between an NRO and an NRE Demat account:

Final Thoughts

Different Demat accounts cater to different investor needs. Indian-citizen investors are eligible to create a Demat account. NRIs can also open Demat accounts that are either repatriable or non-repatriable. NRIs can use an NRI repatriable Demat account to send money abroad to trade Indian equities. After paying the necessary taxes, NRIs can also choose to move money from their NRO to NRE accounts.
If you want to start your investment journey, download the PL Capital Group – Prabhudas Lilladher application and open a Demat account for free!

Frequently Asked Questions

1. How is a repatriable Demat account in the share market different from a non-repatriable Demat account?

Repatriable Demat accounts are linked with an NRE bank account, while non-repatriable Demat accounts are linked with an NRO bank account. In addition, the NRIs can transfer the sale of proceeds in a repatriable account to a foreign bank account, whereas it is restricted in a non-repatriable account.

2. What kind of NRI account can be repatriated?

NRIs must keep both their NRO and NRE accounts open to repatriate funds. In addition, they are also able to repatriate money through a Foreign Currency Non-Resident (FCNR) account.

3. How to determine whether a Demat account may be repatriated?

To determine whether a Demat account may be repatriated, you must identify that if it allows free international money transfers or not.