SEBI to roll out digital KYC for NRIs, faster FPI registration, predictive market surveillance

In a significant step toward deepening foreign participation in India’s capital markets, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced that the regulator is prioritising the simplification of Know Your Customer (KYC) procedures for non-resident Indians (NRIs) to enable remote onboarding. 

Speaking at an event organised by the Bombay Stock Exchange Brokers’ Forum on October 11, Pandey said SEBI’s immediate goal is to ensure NRIs no longer need to travel to India to complete their KYC requirements. 

“We are yet to establish an easy and secure KYC access for NRIs to facilitate their participation in the securities market. This will be an urgent goal for us,” Pandey said. 

Remote KYC for global Indian investors 

SEBI is currently in discussions with the Reserve Bank of India (RBI) and the Unique Identification Authority of India (UIDAI) to build a framework allowing NRIs to complete KYC verification remotely. With over 3.5 crore Indians living abroad and $135 billion in remittances flowing into the country in FY25, SEBI believes that easing market access for the diaspora could unlock significant investment potential. 

The move comes amid a recent slowdown in retail investor activity, marked by a dip in Systematic Investment Plan (SIP) inflows. 

Push for faster FPI registration 

Pandey also announced measures to simplify the registration process for foreign portfolio investors (FPIs) through a single-window, digital portal. 

“We are already consulting stakeholders to implement it... we would like to be among the best in the world in terms of facilitating registration,” he said, adding that the process should be “fast, efficient, and secure.” 

He clarified that these are largely “process issues” and do not entail significant risks. SEBI is working with the RBI and the Income Tax Department to digitise FPI registration and compliance systems. 

Cybersecurity & Market resilience 

The SEBI chief underlined ongoing reforms to bolster cybersecurity and market infrastructure resilience. The regulator is introducing new “air gap” security guidelines in collaboration with market infrastructure institutions (MIIs) and has launched live disaster recovery drills and redundancy models for clearing corporations. 

“MIIs are being stress-tested with live disaster recovery drills,” Pandey said. 

Predictive surveillance & Algorithmic oversight 

On market supervision, Pandey said SEBI is moving toward predictive surveillance using advanced data analytics to detect fraud and market manipulation. 

“We are developing role-based alerts to identify pump-and-dump patterns and fraudulent trades in bulk deals,” he noted, referring to the growing role of algorithmic and high-frequency trading in India’s markets. 

Pandey also highlighted SEBI’s efforts to review the Stock Lending and Borrowing Mechanism (SLBM) to ensure better risk management, while promising a consultative approach to policies governing short-term derivatives. 

He urged stakeholders to drive innovation in capital markets, noting that diversity in financial instruments is key to resilience. On ‘Chhota SIPs’, he acknowledged slow progress but assured steps to unlock their potential. Pandey also said SEBI is addressing tax, delivery, and GST challenges in the commodity derivatives segment to spur growth. 

“These reforms reflect SEBI’s commitment to creating a fair, transparent, and resilient market,” Pandey concluded.