For NRIs (Non-Resident Indians), managing wealth across geographies can be complex, especially when it comes to investing in India. While opportunities in equities, mutual funds, bonds, and alternative assets are attractive, regulatory frameworks and compliance requirements can often be overwhelming.
This is where a custodian for NRI investments comes handy. Custodians act as regulated intermediaries that ensure NRIs can invest in Indian stock markets securely, while also managing the back-end processes such as holding assets, clearing trades, and ensuring compliance with SEBI and RBI guidelines.
Who is a Custodian for NRI Investments?
A custodian is a SEBI-registered entity responsible for safeguarding an NRI investor’s assets and ensuring compliance with local regulations. For NRI investment options in India, custodians act as facilitators by:
- Holding securities on behalf of the NRI
- Settling transactions across stock exchanges
- Managing corporate actions like dividends, rights, and bonuses
- Ensuring tax compliance and reporting
This means NRIs can focus on making investment decisions while the custodian ensures smooth execution and compliance.
Why Do NRIs Need a Custodian in India?
When it comes to understanding how an NRI can invest in the Indian stock market, custodians play a crucial role. Indian regulations mandate that NRIs investing in equities through the Portfolio Investment Scheme (PIS), or directly in listed securities, must route their transactions via a custodian.
The key reasons why NRIs need custodians include:
- Regulatory compliance: SEBI and RBI require custodians to monitor NRI investment flows.
- Transaction security: Custodians ensure assets are held safely and reduce risks of fraud.
- Operational efficiency: They streamline settlements, ensuring quicker processing of trades.
Without a custodian, NRIs cannot directly participate in listed equities, making custodians essential for NRIs’ stock market access.
How Does a Custodian Help Manage NRI Investments?
A custodian simplifies the process of accessing various NRI investment options in India by:
- Managing equity investments under the PIS route
- Facilitating investments in mutual funds, bonds, ETFs, and alternative instruments
- Tracking dividends, interest, and corporate actions
- Handling tax deduction at source (TDS) and filing necessary compliance reports
In short, the custodian ensures that every investment decision is compliant with Indian laws.
Is a Custodian Mandatory for NRIs Investing in Indian Markets?
Yes, a custodian is mandatory for NRIs investing in listed Indian equities through the stock exchanges. This applies to both primary and secondary markets. However, for other avenues like mutual funds, NPS, or bank fixed deposits, custodians are not required, as these investments can be made directly through asset management companies or banks.
Therefore, whether a custodian is required depends on how an NRI invests in the Indian stock market versus other financial products.
What is the Cost of Custodian Services for NRIs?
Custodian fees for NRI investment options in India vary depending on the service provider and the scale of investments. Typically, charges include:
- Account setup and maintenance fees
- Transaction processing charges
- Annual safekeeping or reporting fees
On average, custodians may charge anywhere between ₹2,500 to ₹10,000 annually, along with nominal transaction charges. These costs are justified by the compliance, reporting, and security benefits custodians provide. (Source).
FAQs
1.What is a custodian for NRI investments?
A custodian is a SEBI-registered entity that safeguards and manages investments for NRIs, ensuring compliance with Indian laws.
2.Why do NRIs need a custodian in India?
NRIs may require custodians to access certain market segments such as intraday trades and F&O (derivatives trading) under the Portfolio Investment Scheme (PIS), to comply with RBI/SEBI rules, and to ensure safe settlements of trades. For simple delivery-based equity trading on the stock exchange, a custodian is not mandatory.
3.How does a custodian help manage NRI investments?
A custodian assists NRIs by holding securities in electronic form, processing buy/sell transactions, handling corporate actions like dividends and bonus issues, and ensuring compliance with SEBI and RBI regulations. This makes investing in Indian markets more seamless and secure, especially for advanced trading segments.
4.Is a custodian mandatory for investing in Indian markets?
No, a custodian is not mandatory for delivery-based equity trading under PIS, mutual funds, NPS, or bank fixed deposits. However, for F&O trading and intraday transactions on stock exchanges, having a custodian is mandatory.
5.What is the cost of custodian services for NRIs?
Custodian charges range between ₹2,500–₹10,000 annually, depending on the service provider and the scale of investments.
Final Thoughts
Navigating NRI investments via stock exchanges in India requires careful planning and strict compliance with local regulations. Custodians not only enable NRIs to invest in Indian stock markets seamlessly but also ensure that their investments remain secure and compliant.
At Rurash Financials, we partner with leading custodians and advisors to help NRIs unlock India’s growth story with confidence. Speak with a Rurash advisor today to explore the right structure for your investments in 2026, and beyond.