SEBI allows digital KYC for overseas investors without physical presence in India

Mumbai: The Securities and Exchange Board of India (SEBI) on Wednesday relaxed know-your-customer (KYC) requirements for persons resident outside India (PROIs), allowing eligible overseas investors from Financial Action Task Force (FATF)-compliant jurisdictions to complete digital onboarding without being physically present in India.

The revised framework, which will come into effect on December 3, is aimed at simplifying the investment process for non-resident Indians (NRIs), overseas citizens of India (OCIs) and foreign nationals seeking access to Indian financial markets.

Investors residing in FATF non-compliant countries, however, will continue to be governed by the existing KYC requirements.

The move is expected to streamline onboarding procedures and encourage greater participation by overseas investors in Indian capital markets.

Under the new norms, market intermediaries will be permitted to accept KYC information and supporting documents through digital channels from eligible clients.

In a significant reform, SEBI has also made KYC records portable across intermediaries.

This will enable investors to use KYC records maintained with one intermediary for transactions with another, even if all individual attributes have not been validated.

The regulator has further allowed intermediaries to rely on KYC conducted by another SEBI-registered intermediary or an entity regulated by any other financial sector regulator.

Such reliance can be based on records available with KYC Registration Agencies (KRAs) or the Central KYC Records Registry.

As part of the revised framework, overseas investors will be required to submit copies of their passports and, where applicable, OCI cards.

SEBI has allowed overseas residential addresses to be used as proof of address. Clients will have the option of submitting KYC forms either digitally or physically, while specimen signatures can also be provided electronically, subject to verification during video-based in-person verification.

To strengthen safeguards, the market regulator has mandated the presence of an authorised official during video verification and required concurrent audits of the process.

The regulator clarified that intermediaries will continue to bear ultimate responsibility for client due diligence and must undertake enhanced verification measures based on investors' risk profiles.

Under the new rules, intermediaries will be required to upload completed KYC records to KRAs within three working days.

The revised provisions will also apply to re-KYC processes for existing clients residing in FATF-compliant countries.