NRIs, OCIs can complete SEBI KYC from abroad: What changes under new proposal?

The Securities and Exchange Board of India (Sebi) has proposed allowing Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals to complete digital KYC for investing in India’s securities market without being physically present in the country. The proposed relaxation will apply to individual Persons Resident Outside India (PROIs) located in Financial Action Task Force (FATF)-compliant countries.

What changes for NRIs and OCIs?

Under the existing framework, digital onboarding requires the client to be physically present in India. Sebi’s consultation paper said this requirement makes it difficult for PROI clients based overseas to complete the onboarding process digitally.

The proposed changes would allow intermediaries to accept digital submission of KYC records and related documents from eligible individual PROIs located in FATF-compliant jurisdictions. This means an NRI or OCI living abroad would not have to travel to India simply to complete the digital KYC process.

Sebi said the proposed relaxation is aimed at simplifying client onboarding and enabling seamless digital access to the securities market.

What safeguards will apply?

The relaxation will come with additional safeguards for intermediaries. These include a liveness check, KYC verification in the presence of authorised representatives and live capture of the client’s latitude and longitude.

The location captured during onboarding would have to match the country mentioned in the investor’s proof of address. Intermediaries would also be required to prevent connections originating from spoofed IP addresses.

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Sebi said the proposed relaxation would particularly benefit PROI clients who already have a bank account and want to access the Indian securities market without having to be physically present in India during onboarding.

KYC records could become portable

The proposal also seeks to make KYC records of individual PROIs portable. KYC Registration Agencies (KRAs) would treat such records as portable, with individual attributes marked as “validated” where they have been verified against an official or source database.

PROI clients could also provide a self-declaration of their current address if the officially valid document submitted by them can be verified through an official or source database.

Sebi has further proposed allowing intermediaries to rely on KYC already completed by another Sebi-registered intermediary or an entity regulated by another financial-sector regulator, based on records obtained through the KYC system.

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Why is Sebi proposing the change?

The proposal follows representations from stakeholders seeking relaxation of requirements relating to physical presence, original document verification, signatures and KYC portability.

Sebi noted that PROIs represent a growing pool of investment into India and play an important role in the country’s securities market.

“Enabling smooth onboarding would enhance market participation, make investing back home easier for the Indian diaspora (NRIs and OCIs), which would lead to channelisation of overseas savings into Indian capital markets,” the consultation paper said.

The proposal also follows the Finance Ministry’s June amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, which allows foreign nationals to invest in Indian securities without using the foreign portfolio investment route.

The proposed KYC changes are intended to make it easier for eligible overseas investors to participate in Indian capital markets while retaining additional identity, location and fraud-prevention safeguards.

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