SEBI Relaxes Digital KYC Norms for Non-Resident Indian and Foreign Clients

The Securities and Exchange Board of India (SEBI) has announced a comprehensive review of the Know Your Client (KYC) framework for individual Persons Resident Outside India (PROI), easing digital on-boarding requirements for non-resident clients [1]. Under a circular dated November 04, 2026, the market regulator removed the previous restriction that mandated a client's physical presence in India during the digital KYC process, provided the individual is located in a Financial Action Task Force (FATF) compliant country [1].

Background and Scope of Review

Previously, SEBI's Master Circular from October 12, 2023, required intermediaries to ensure that clients were physically located within India during digital KYC execution [1]. This rule effectively restricted individuals residing outside the country from completing digital submissions and remote on-boarding [1]. Following representations from market participants, SEBI reviewed the framework to facilitate smoother entry for individual PROI clients, defined under the Foreign Exchange Management Act, 1999, as persons not resident in India [1]. This category encompasses Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and foreign nationals [1].

Relaxed Digital On-Boarding and FATF Compliance

Under the updated guidelines, intermediaries registered under Section 12 of the SEBI Act, 1992, along with recognised stock exchanges, clearing corporations, and depositories, can accept digital KYC submissions and supporting documents from PROI clients situated in FATF-compliant jurisdictions [1]. Intermediaries are required to identify clients, verify their identities, and gather information regarding the intended nature and purpose of the business relationship at the commencement of an account-based relationship [1].

When a client approaches an intermediary, the institution must request the PAN and Central KYC Records Registry (CKYCRR) ID if available, followed by retrieving existing records from KYC Registration Agencies (KRAs) and CKYCRR [1]. Additional details are only collected if there are changes to records, incomplete data, expired officially valid documents (OVDs), or when the intermediary deems enhanced due diligence necessary [1].

Document Verification and Attribute Validation

The circular outlines specific verification protocols for different document types:

• PAN Collection: Intermediaries must collect and verify the client's PAN against the Income Tax Database without demanding physical copies or original cards [1]. KRAs will similarly verify the PAN and client name, tagging the attribute as validated in the record [1].
• Passports and OCI Cards: Intermediaries must collect copies of the client's passport and, where applicable, the OCI card, verifying them if feasible [1]. KRAs will also perform passport verification where feasible to tag the attribute as validated [1].
• KYC Forms and Signatures: Clients may submit forms digitally, via scanned copies under electronic signatures, or through original physical documents [1]. Specimen signatures can be provided via wet signatures on physical forms, cropped images under electronic signature, or executed live during Video In Person Verification (VIPV) [1].
• Proof of Identity and Address: Intermediaries must collect specified officially valid documents or deemed officially valid documents [1]. For foreign nationals whose documents lack address details, documents from a foreign government department or letters from a foreign embassy or mission in India are acceptable [1].

KRA Portability and Audit Requirements

KRAs are mandated to tag individual attributes as validated when confirmed against official source databases [1]. All KYC records remain fully portable, meaning they can be shared with other intermediaries regardless of whether every individual attribute is fully validated [1]. Furthermore, intermediaries are permitted to rely on KYC procedures previously completed by other SEBI-registered intermediaries or regulated financial sector entities, using records obtained from KRAs or CKYCRR [1].

To maintain regulatory oversight, an authorised official of the intermediary must be present during the VIPV process, which will be subject to concurrent audit [1]. Updated KYC information processed by intermediaries must be forwarded to KRAs to synchronize records across all participating intermediaries [1].

The regulatory update addresses long-standing operational hurdles faced by Non-Resident Indians, Overseas Citizens of India, and foreign nationals seeking to participate in Indian securities markets from abroad. Prior rules necessitated physical presence or cumbersome courier channels for document authentication.

Streamlining the KYC process removes friction for global capital inflows from international retail investors, NRIs, and foreign nationals, potentially accelerating digital account opening times across Indian brokerages and financial intermediaries.

The policy shift could lead to an increase in remote account openings by non-resident investors by cutting down administrative friction. Intermediaries may experience reduced compliance overhead over time through reliance on CKYCRR records and interoperable KRA validation.

Relying on digital verification and foreign-issued address documents introduces operational dependencies on foreign government database responses and electronic signature integrity. Improper execution of VIPV could also create compliance vulnerabilities.