Sebi Proposes Remote KYC for NRIs, Dropping Physical Presence Rule

The Securities and Exchange Board of India wants to scrap the rule that forces overseas investors to be physically present in the country to open an investment account. The regulator's consultation paper, published Aug. 14, proposes digital Know Your Customer (KYC) for Non-Resident Indians, Overseas Citizens of India and eligible foreign nationals living in FATF-compliant countries such as the U.S., the U.K., Japan, Canada, Germany and Australia.

If the proposal becomes law, an NRI in Dubai or a U.S.-based OCI could complete the entire onboarding process remotely through a web app, video verification and e-signed forms. No couriers, no notarized paper, no trip back to India just to activate a demat account.

Sidhant Agarwal, a chartered accountant and co-founder of India for NRI, said the current system routinely blocks overseas professionals during video verification because the compliance software detects a foreign GPS location. That forces the investor to wait until their next visit to India. Under the new rules, that same GPS data – matched to the investor's overseas proof of address – would become part of the verification, not a reason to reject it. Account activation could shrink to one or two days, he said.

Portable KYC is another piece of the proposal. Today an NRI expanding a portfolio across a broker, multiple mutual fund houses and a portfolio management service has to redo the entire KYC procedure with fresh notarization and paperwork for each intermediary. Under the proposed framework, a single verified digital record would work across all Sebi-registered entities, Agarwal said.

The same principle applies to estate settlements. U.S.-based heirs inheriting shares from a late NRI parent's Indian demat account could fulfil KYC requirements remotely, matching GPS coordinates to their overseas address instead of flying in, he added.