The Securities and Exchange Board of India (Sebi) has proposed simpler digital KYC rules for Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals investing in Indian securities. The biggest proposed change allows eligible overseas investors from Financial Action Task Force (FATF) compliant countries to complete digital KYC while physically outside India. As reported by SEBI's consultation paper released on August 14, 2026, this could remove one of the major hurdles in opening or updating Indian investment accounts from abroad. However, these are proposals, not final rules yet, with SEBI inviting public comments until September 4, 2026 before issuing final requirements.
The Securities and Exchange Board of India (Sebi) has introduced new provisions allowing entities regulated by the International Financial Services Centres Authority (IFSCA) to access systems of registered KYC registration agencies. According to reports from PTI, this move facilitates seamless sharing of client information for financial services, enabling interoperability between different regulatory frameworks. The markets watchdog stated that the step will enable interoperability and facilitate sharing of information between Sebi-registered KRAs and entities regulated by IFSCA. As per the latest circular dated August 20, 2026, Sebi has now specified IFSCA under Regulation 16A(1) of the KYC Registration Agency Regulations, 2011 to enable this interoperability.
Under the proposed framework, SEBI proposes treating PROI KYC records as portable even where every attribute has not been validated. Each KYC attribute that has been source-verified would instead be individually tagged as validated, allowing new intermediaries to perform additional checks based on their assessment of the investor's risk. Additionally, SEBI proposes allowing intermediaries to rely on KYC completed by another SEBI-registered intermediary or an entity regulated by another financial-sector regulator, based on records obtained through the Central KYC Records Registry (CKYCRR). The intermediary would still retain ultimate responsibility for its client's KYC, ensuring proper oversight while enabling greater efficiency in the verification process.
All entities accessing the KRA system will be subject to applicable provisions of the KRA Regulations and Sebi's master circular on KYC norms for the securities market, as amended from time to time. According to the latest circular, in cases of clients registered as Foreign Portfolio Investors (FPIs), the entities will also have to comply with SEBI's Master Circular dated May 30, 2024 for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors, as amended from time to time. For FPI clients, entities must follow the Data Security guidelines specified in the FPI Master Circular dated May 30, 2024, as amended from time to time. The proposed safeguards include liveliness check during video verification, Video In-Person Verification (VIPV) in the presence of an authorised representative, live capture of latitude and longitude, matching the investor's location with the country stated in the address proof, measures to prevent spoofed IP connections, and compliance with SEBI's cybersecurity and cyber-resilience requirements.
The proposed changes would particularly benefit investors who live and work abroad permanently, do not have easy access to an Indian mobile number, need to open an Indian securities account from overseas, or want to use an existing KYC record with another intermediary. However, there is no final effective date yet as SEBI's August 14 document is a consultation paper accompanied by a draft circular. The regulator has invited comments on issues such as overseas digital onboarding, mobile verification, electronic signatures, address self-declaration, KYC portability and additional safeguards for video verification. SEBI may modify the framework after reviewing stakeholder feedback before issuing final requirements. The practical impact could be substantial for NRIs and OCIs who want to invest in Indian securities, as the changes would enable more of the KYC process to potentially happen online from the investor's country of residence.
