The Securities and Exchange Board of India (SEBI) has released a consultation paper proposing significant changes to Know Your Client (KYC) processes for Non-Resident Indians (NRIs). According to reports from Mint, the regulator's consultation paper titled 'Review of Know Your Client Process for Individual Persons Resident Outside India' aims to ease investment barriers for retail NRIs by removing the requirement for physical presence in India during the KYC process. As reported by The Economic Times, SEBI acknowledges that the current system is slow, expensive, and increasingly out of step with how much of the diaspora actually wants to invest.
Under the existing system, NRIs seeking digital account opening must be physically present in India. As reported by Mint, the current requirement for digital onboarding poses significant hurdles because intermediaries must capture the client's latitude and longitude within India. CA Kinjal Shah, President of Bombay Chartered Accountants' Society (BCAS), noted that this creates inconvenience for NRIs who are usually required to come to India and provide additional documents. The Economic Times reports that NRIs, OCIs and foreign nationals wishing to invest in Indian securities have had to either travel to India or rely on courier bound paperwork simply to satisfy a geo tagging requirement during digital KYC.
The new proposal would allow eligible overseas investors to complete KYC digitally from their country of residence, eliminating the physical presence requirement. According to Mint reports, the system would include video-based onboarding and verification across entities, making it easier for investors from FATF compliant jurisdictions. The proposed framework would allow PROI clients to submit their KYC forms and documents digitally using electronic or digital signatures, with options including a scanned copy of a physical form under electronic signature or a digital KYC form under electronic signature. During Video In-Person Verification, investors would still have to provide a wet signature before the intermediary, which would then verify whether it matches the signature submitted earlier.
Industry experts welcome the regulatory changes as a significant improvement. Vikram Shah, CEO and Founder of Vested Finance, told Mint that the proposal should open the door for retail investor NRIs who can invest in lower ticket sizes as small as $5,000. CA Kinjal Shah emphasized that the main advantage is efficiency through paperless processing and simplified KYC documentation. Nithin Kamath, founder and CEO of Zerodha, acknowledged the difficulties NRIs encounter during the onboarding process and stated that SEBI's proposals in the new consultation paper fix this longstanding gap. However, as reported by Mint, the recent relative underperformance of Indian markets and rupee depreciation could still influence NRI investment decisions despite the digital route availability.
