Investing in India from abroad? SEBI proposes digital KYC for NRIs, OCIs without physical presence in India

The Securities and Exchange Board of India (SEBI) has proposed easing the KYC process for individual Persons Resident Outside India (PROIs), potentially allowing eligible Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals to complete digital onboarding for India's securities market while remaining overseas.

The proposal seeks to remove a key hurdle in the existing process, under which digital onboarding requires the client to be physically present in India. SEBI has proposed allowing eligible individual PROIs in Financial Action Task Force (FATF)-compliant countries to submit KYC records and related documents digitally from abroad.

The move could make it easier for overseas investors to access India's securities market without travelling to India simply to complete KYC.

What changes for NRIs, OCIs and foreign nationals

Under the proposed framework, eligible individual PROIs based in FATF-compliant jurisdictions would be permitted to complete digital KYC without being physically present in India.

The proposal covers NRIs, OCIs and foreign nationals who meet the prescribed eligibility conditions. However, individuals seeking registration as foreign portfolio investors would continue to be governed by the separate FPI framework.

The relaxation would come with additional safeguards. These include a liveness check, KYC verification in the presence of an authorised representative and live capture of the investor'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.

Therefore, the proposal does not remove KYC checks. Instead, it allows them to be completed digitally from overseas while adding identity, location and fraud-prevention measures.

SEBI said the change could particularly benefit PROI clients who already have a bank account and want to access India's securities market without being physically present in India during onboarding.

KYC records could become portable for overseas investors

SEBI has also proposed making KYC records of individual PROIs portable across intermediaries. KYC Registration Agencies (KRAs) would be able to treat such records as portable, with individual attributes marked as "validated" when they have been verified against an official or source database.

This could reduce the need for overseas investors to repeatedly complete the same KYC process when approaching another SEBI-registered intermediary.

The regulator has also proposed allowing a PROI to 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.

An intermediary could also 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.

SEBI said the proposals follow stakeholder representations seeking relaxation of requirements relating to physical presence, original document verification, signatures and KYC portability.

The regulator said PROIs represent a growing pool of investment into India and that smoother onboarding could make investing back home easier for the Indian diaspora while helping channel overseas savings into Indian capital markets.

The changes are currently proposals and will need to be finalised by SEBI before they take effect.