NRIs can complete investment KYC from abroad starting Dec 3: What changes?

Résumé détaillé

Weeks of paperwork could give way to a faster digital process as Sebi removes the requirement for overseas investors to be physically present in India for digital KYC

For years, a non-resident Indian (NRI) in Dallas or Dubai who wanted to invest in Indian shares first had to find a printer. From December 3, however, a phone or laptop could be enough to begin the process.

Under a circular issued on November 4, individual non-residents will be allowed to complete their know-your-customer (KYC) verification — the identity checks required before opening an investment account — remotely. The change covers NRIs, Overseas Citizens of India (OCIs) and foreign nationals residing in countries that comply with the standards of the Financial Action Task Force (FATF), the global watchdog against money laundering and terror financing. Investors in countries that do not meet these standards will have to follow the existing process.

Until now, Securities and Exchange Board of India (Sebi) rules, under its KYC Master Circular of October 2023, required investors completing digital KYC to be physically present in India. The new circular acknowledges that this restriction effectively prevented overseas investors from completing the process digitally. As a result, many NRIs waited until their next visit to India to open an investment account. Those applying from abroad had to rely on physical paperwork.

There were two routes. Digital KYC, done online, was allowed only if the investor was in India at the time. Somnath Mukherjee, Zerodha’s vice-president, corporate development, said e-signing was “not permitted” from any internet address outside India, even for investors with an Aadhaar-linked mobile number or a digital signature.

That left investors abroad with the paper route, which brokers such as Zerodha describe as cumbersome. Investors had to print application forms and gather copies of their Permanent Account Number (PAN) card, passport or OCI card, overseas address proof and a cancelled cheque.

Each document had to be attested, or certified as a true copy of the original, by a notary public, an Indian embassy or consulate, or an overseas branch of…

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