Mutual funds best avenue for PIOs to bet on Indian markets

Having an Indian origin and settled in Australia, I hold an Australian passport.While in India, I maintained a demat account, held some Indian equity shares, added additional shares and paid from my Non Resident Ordinary Rupee (NRO) account maintained in India. Kindly advice if I can continue the same demat account in the same status, and if anything else is required for buying and selling in the Indian market? How can I dispose the existing shares from the same account?

As a person of Indian origin (PIO), you cannot continue to buy and sell shares through the demat account opened while you were an Indian resident. For buying and selling shares,  your bank would have to open two separate demat accounts – one each for investment with repatriation rights, and the other without repatriation rights. A specific Non Resident External (NRE) or NRO bank account will be linked to the demat account with repatriation right and an NRO bank account will be specifically linked to the demat account without repatriation benefit. All the holdings in your existing resident demat account would have to be transferred to the demat account without repatriation rights. You will need to open a share broking account which will be linked to these demat account(s) and NRE/NRO account(s). Persistent buying or selling of shares on the stock exchange after turning into a PIO without doing these activities, is legally prohibited. Mutual fund route is ideal for fresh investors to enter the equity or debt market where dealing can begin simply post completing the KYC process.

Send your queries to personalfinance@dnaindia.net or tweet them to @AskHarshdna