Q152. Can a foreigner open a demat account in India

Question: Dear Mr. Chand, I am a US Citizen. Do not have OCI or PIO status as yet. I went to India on Tourist visa (R) status and applied for DEMAT account with SBI using our US Address. Gave them a copy of visa, passport, proof of home address, PAN card proof etc. They rejected the DEMAT application and have advised that I need to be a Indian citizen and use India address on the forms. Can you please clarify if I am eligible for DEMAT account? With Regards, Mahesh

Answer: Foreign nationals of non-Indian origin (as individuals) are not allowed online access to the Indian stock market. Foreign institutional investors can invest by using brokers and getting the appropriate approvals from the authorities. Foreign nationals who have OCI or PIO status can open a Demat account but they cannot personally operate the account unless they go through authorized brokers in India.

OCI holders and PIO holders can open Demat accounts by filling in a PIS Form which is available at most banks who allow Demat accounts. While NRIs can open Demat accounts they are restricted from doing online trading directly. They must deal through a broker who would do buying and selling on their instructions.