The Securities and Exchange Board of India's (Sebi) proposal to enable fully digital KYC for Non-Resident Indians (NRIs) has received strong industry endorsement. Zerodha co-founder Nithin Kamath has welcomed the move, calling it 'huge' and saying it could remove one of the biggest hurdles faced by overseas investors. In a post on Substack, Kamath said the proposal could significantly expand the pool of NRI capital flowing into Indian markets. The regulator's consultation paper issued on August 14, 2025 addresses a key bottleneck that has prevented seamless overseas investor onboarding, with the requirement to capture latitude and longitude of a client within India previously preventing intermediaries from offering complete digital onboarding to individuals located overseas. As per ET Now, Kamath emphasized that NRIs tend to have large amounts of capital to invest and are a highly durable source of inflows into Indian markets, making the proposed reform particularly significant for capital market development.
The Securities and Exchange Board of India (Sebi) is considering allowing Professional Offshore Investors (PROIs) to complete Know Your Customer (KYC) procedures digitally without requiring physical presence in India. According to the regulator's consultation paper issued on August 14, 2025, the proposal would enable intermediaries to accept digital submission of KYC records and related documents from individual PROI clients located in FATF-compliant countries. This would simplify the onboarding process for PROI clients and enable seamless digital onboarding in the securities market. Under the proposed framework, clients could submit KYC forms through an app, website or other digital mode, including electronically signed scanned forms and digital KYC forms. Sebi has also proposed accepting a cropped image of a client's specimen signature, with the investor required to provide a wet signature during video in-person verification, or VIPV. The framework specifically targets individual Person Resident Outside India (PROI) clients, including Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals residing outside India.
The regulator has introduced Video In-Person Verification (VIPV) as a key component of the proposed framework, with intermediaries required to undertake video-based customer identification and verification for individual PROI clients. The infrastructure used for this process will be required to verify face liveness and detect spoofing attempts, while ensuring that such checks do not exclude persons with special needs. The proposed safeguards include liveness checks, KYC in the presence of authorized representatives, live capturing of latitude and longitude to match with the country specified in proof of address, and prevention of connections from spoofed IP addresses. For remote video verification, SEBI has proposed additional safeguards including concurrent audits and compliance with cybersecurity requirements. The biggest safeguard accompanying the proposed relaxation would be VIPV (Video In-Person Verification). For clients in FATF-compliant countries, Sebi would remove the requirement to be physically present in India, while requiring intermediaries to put in place controls including live GPS capture, facial matching, protection against spoofed IP addresses, end-to-end encryption and concurrent audits.
The proposal seeks to make KYC records of individual PROIs portable, with KYC Registration Agencies (KRAs) treating all such records as portable, where individual attributes are tagged as 'validated' where they have been verified with an official or source database. As reported by Sebi, PROI clients would be permitted to provide self-declaration of their current address if the officially valid document submitted by them can be verified with an official or source database. The regulator has also proposed allowing intermediaries to rely on KYC undertaken by another Sebi-registered intermediary or an entity regulated by another financial sector regulator, based on records obtained through the KYC system. Under the proposed framework, KYC records for persons residing outside India would be portable even when the entire record has not been validated, with individual KYC attributes tagged based on whether they had been verified against official or source databases. The proposed process will also apply to re-KYC of clients residing in FATF-compliant countries. SEBI's press release described this as 'One KYC for multiple intermediaries', where information that has been verified against official or source databases would be appropriately flagged and shared with other intermediaries, which could carry out additional checks based on their risk assessment.
The proposed framework will apply to onboarding of PROI clients, except those residing in FATF non-compliant countries, for whom the existing KYC process will continue to apply. For individual foreign nationals seeking registration as Foreign Portfolio Investors (FPIs), the existing provisions under Sebi's Master Circular for FPIs, Designated Depository Participants and Eligible Foreign Investors will continue to apply. Under the proposed framework, intermediaries will retain the ultimate responsibility for the KYC of its clients and will have to undertake enhanced KYC measures in line with the client's risk profile. Once KYC of an individual PROI client is completed, the intermediary will have to provide the KYC information to KRAs within three working days. The regulator has also proposed expanding the list of certifying authorities to include authorised officials of overseas banks that have relationships with Indian banks. Additionally, Sebi has proposed mandating the collection of email IDs from PROI clients to facilitate communication with intermediaries, while relaxing mobile-number verification where necessary. The proposals also include permitting digital submission of KYC forms and officially valid documents using electronic or digital signatures, including Aadhaar e-sign where available for document authentication.
The proposal aligns with the Finance Ministry's June amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, which permits foreign nationals to invest in Indian securities without using the Foreign Portfolio Investment (FPI) route. According to Sebi's consultation paper, PROIs play a key role in the Indian securities market and represent a growing pool of investment into India. As reported by Sebi, the regulator aims to facilitate the inflow of investment into the Indian securities market and ease business operations for intermediaries. The consultation paper has been uploaded on the SEBI website for public comments until September 4, 2026, providing stakeholders with adequate time to provide feedback on the digital onboarding initiative. Once the final circular is issued, the revised framework is proposed to take effect after 30 days. Explaining the rationale, SEBI said persons resident outside India represent a significant and growing pool of investment into India and smoother onboarding would make investing easier for the Indian diaspora and help channel overseas savings into Indian capital markets. The proposals are aimed at reviewing the existing onboarding process for individual PROI clients and simplifying it in view of the various digital onboarding modes available to investors.
