SEBI Proposes Simplified KYC Framework for Persons Resident Outside India
SEBI’s proposed reforms seek to make digital onboarding of NRIs, OCIs and foreign nationals more accessible while retaining risk-based safeguards
On August 14, 2026, the Securities and Exchange Board of India (SEBI) issued Press Release No. 46/2026 announcing a consultation paper proposing significant relaxations in the Know Your Client (KYC) framework applicable to individual Persons Resident Outside India (PROIs). PROIs, for this purpose, include Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals located outside India.
The proposals are aimed at removing practical barriers to onboarding overseas investors into the Indian securities market, particularly the existing requirement that a non-resident client be physically present in India for digital KYC.
What is SEBI proposing?
- Digital onboarding from outside India
The most significant proposal is to permit PROIs located in FATF-compliant countries to complete their KYC digitally without being physically present in India.
Under the existing framework, digital onboarding of non-resident clients requires the client’s location to be in India at the time of onboarding. SEBI notes that this requirement has made complete digital onboarding of PROIs outside India impractical and has resulted in reliance on physical documentation, couriering and other cumbersome processes.
The proposed framework would permit digital submission of KYC records and related documents by a PROI located in a FATF-compliant jurisdiction.
- Greater portability of KYC records
SEBI proposes that KYC records of individual PROIs be treated as portable across intermediaries.
Importantly, each attribute in the KYC record would be individually tagged as “validated” where it has been verified against an official or source database. This would allow another intermediary to rely on the available KYC information while conducting additional checks based on its own risk assessment.
This is particularly relevant for investors maintaining multiple securities-market relationships, as it could substantially reduce repetitive onboarding requirements.
- Reliance on KYC performed by other regulated entities
The proposals would also permit an intermediary to rely on KYC undertaken by:
- another SEBI-registered intermediary; or
- an entity regulated by another financial sector regulator, based on records obtained through the Central KYC Records Registry (“CKYCRR”).
The other financial sector regulators contemplated include the RBI, IRDAI, PFRDA and IFSCA. However, reliance on third-party KYC would not transfer the ultimate responsibility for KYC from the intermediary. The intermediary would remain responsible for undertaking enhanced KYC measures proportionate to the client’s risk profile.
- Relaxation around address and communication details
SEBI proposes permitting a PROI to self-declare the current address where the officially valid document submitted by the client has been verified against an official or source database. The framework also proposes mandating collection of the client’s email ID, while verification of the foreign mobile number may be undertaken where feasible. This recognises the practical difficulties associated with OTP-based verification of overseas mobile numbers.
- Wider pool of persons authorised to certify documents
The list of persons authorised to certify documents may be expanded to include authorised officials of branches of overseas banks having relationships with Indian banks. This would provide an additional route for document certification and reduce dependence on notarisation, consular certification and courier-based processes.
Digital convenience is accompanied by stronger controls
The proposal does not simply remove the physical-presence requirement. SEBI proposes a detailed set of safeguards for Video In Person Verification (VIPV). These include:
- recording client consent in an auditable and alteration-proof manner;
- random action initiation to establish that the interaction is live;
- live GPS coordinates and timestamping;
- prevention of connections through spoofed IP addresses, VPNs or proxy servers;
- matching the client’s IP location with the country disclosed in the KYC documentation;
- clear facial capture and matching;
- end-to-end encryption;
- verification by an authorised official of the intermediary;
- face-liveness and spoof detection; and
- concurrent audit of the VIPV process.
Intermediaries would also have to ensure compliance with SEBI’s Cyber Security and Cyber Resilience Framework.
Why this matters
The proposal needs to be viewed in the broader context of India’s efforts to facilitate foreign investment into Indian securities.
SEBI notes that PROIs represent a significant and growing pool of investment into India and that easier onboarding could facilitate greater participation by the Indian diaspora and channel overseas savings into Indian capital markets. The consultation paper also follows recent policy developments expanding investment access for PROIs, including the June 2026 amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 permitting foreign nationals to invest in Indian securities without necessarily using the FPI route.
The proposed KYC changes therefore address an important operational gap: investment eligibility may be expanded, but that expansion is meaningful only if the investor can practically enter the securities market without an unnecessarily physical and paper-heavy onboarding process.
What intermediaries should watch
For securities-market intermediaries, the proposed framework could reduce onboarding friction but increase the importance of technology controls, audit trails and risk-based KYC governance.
Intermediaries should particularly evaluate:
- the reliability of geo-location and IP verification;
- spoofing, deepfake and liveness risks in VIPV;
- controls around reliance on KYC performed by another regulated entity;
- responsibility for validating individual KYC attributes;
- data-sharing and cybersecurity implications of portable KYC records; and
- procedures for enhanced due diligence where the underlying KYC record is incomplete or insufficiently validated.
The consultation paper expressly preserves the intermediary’s ultimate responsibility for KYC notwithstanding reliance on third-party records.
Next steps
The proposals are presently at the consultation stage. SEBI has invited public comments on the proposed framework until September 4, 2026. If implemented broadly in their proposed form, the changes could materially simplify access to the Indian securities market for overseas individual investors while establishing a more technology-driven KYC architecture for cross-border onboarding.
