Unlocking NRI Investment Potential: SEBI’s New Circular Eases KYC Norms, Enables Online Onboarding

The Securities and Exchange Board of India (SEBI) has introduced a draft circular focused on simplifying and modernizing the onboarding process for Non-Resident Indians (NRIs) investing in Indian securities markets. The proposed relaxations and digital initiatives aim to foster greater participation by leveraging technology, reducing procedural hurdles, and enhancing security.

Key highlights:

Relaxation of Norms: The draft circular proposes relaxed rules around KYC procedures, enabling NRIs to complete their client onboarding entirely online without physical visits to India.

Digital KYC & Video Verification: SEBI is pushing for secure remote KYC verification via digital methods such as eKYC, video-based verification, and DigiLocker sharing of documents.

Use of Aadhaar & e-Sign: The circular emphasizes using Aadhaar-based eKYC and e-Signatures to authenticate identity, with online Aadhaar verification permitted through approved entities like BSE, NSE, and NSDL.

Geo-Tagging & Offline Verification: While geo-tagging remains mandatory for KYC completed in India, offline Aadhaar verification using QR codes or XML files will be allowed for NRIs outside India, ensuring flexibility.

Enhanced Security & Efficiency: The reform aims to streamline onboarding, reduce time and costs, and maintain robust security standards aligning with regulatory requirements.

Policy Push & Digital Platforms: The circular supports initiatives like the e-KYC Setu system of the National Payments Corporation of India, facilitating secure Aadhaar-based verification for intermediaries.

Impact & Future: These relaxed and digitalized procedures are expected to significantly increase NRI participation, help tap into global Indian investor pools, and invigorate Indian capital markets.

SEBI’s move aligns with its broader efforts to modernize investor onboarding processes, making India’s financial markets more accessible to the global diaspora while ensuring compliance, security, and efficiency through innovative technology.

Sources: SEBI, MoneyControl, Economic Times, NSE, BSE, NSDL