SEBI consults digital KYC onboarding for NRIs; Zerodha’s Kamath calls it a boost to inflows

New Delhi [India], August 18: SEBI's proposal to allow Non-Resident Indians (NRIs) and other eligible overseas investors to complete their KYC digitally without being physically present in India could make it easier and faster for overseas money to enter Indian markets, Zerodha Founder and CEO Nithin Kamath said.Kamath welcomed SEBI's move in a social media post, saying the proposal could remove a long-standing hurdle faced by NRIs seeking to invest in India.SEBI proposes digital KYCLast week, SEBI released a consultation paper, "Review of Know Your Client Process for Individual Persons Resident Outside India", and proposed the relaxation for individual Persons Resident Outside India, including NRIs, Overseas Citizens of India (OCIs) and foreign nationals living abroad, in countries compliant with the Financial Action Task Force (FATF)."SEBI just released a consultation paper proposing a fully digital onboarding process for NRIs, without needing them to be physically present in India! Kudos to SEBI for this pragmatic move," Kamath said.Under the proposal, eligible overseas investors would be able to complete KYC digitally from their country of residence.SEBI said the current requirement for digital onboarding creates a hurdle because intermediaries need to capture the latitude and longitude of the client within India. The proposed relaxation is aimed at removing this requirement for eligible investors located overseas.NRIs seen as key investorsKamath said the change could be significant because NRIs represent an important source of capital for Indian markets."This is huge because NRIs tend to have large amounts of capital to invest and are a highly durable source of inflows into Indian markets," he said.He cited Zerodha's own NRI investor base to explain the potential. According to Kamath, more than 50,000 NRIs are currently investing through Zerodha, with around 80 per cent of them being active."A stat that surprised me when we looked at our numbers: ~80% of them are active. That's a ridiculous number," Kamath said.He added that NRI investors tend to invest more, take a longer-term approach and appear to be more persistent investors compared with regular investors.Sebi Suspends New Mandates For Corporate Capital Ventures After Compliance FailuresOnboarding remains hurdleAccording to Kamath, the number of NRIs investing through Zerodha has increased significantly over the last few years, helped by earlier changes that made the investment process simpler.He said most NRIs now invest through NRO Non-PIS accounts, after earlier SEBI changes removed the need for the entire PIS setup. These accounts, he said, function much like resident accounts, with access to intraday, BTST and F&O, without the need for a CP code.However, Kamath identified onboarding as the major remaining hurdle."But one massive bottleneck has remained: onboarding," he said.At present, an NRI seeking to open an account digitally needs to be physically present in India. For those living abroad, the process involves physical documentation and international courier services, which can add significant delays.Also Watch:Faster access to marketsKamath said SEBI's proposal could address this problem by allowing e-signatures directly from the client's country of residence."Something that would take 2-3 weeks or even months could be done within 1-2 days. That's a big win," he said.He said reducing the paperwork and delays could significantly expand the NRI investor base. "By removing all this friction, this investor base can easily be many times larger," Kamath said.The proposal is therefore aimed not only at making account opening easier for overseas Indians but could also improve the speed at which overseas investors access Indian securities markets.Kamath said bringing more foreign money into India has wider benefits beyond individual investors."Getting foreign money into India matters. It helps the investors, but it also helps the rupee and the larger India story. Anything that makes it easier for this money to come into India is worth doing," he said.SEBI's proposal is currently part of the consultation process. The proposed relaxation would apply to individual overseas investors located in FATF-compliant countries, while existing KYC requirements would continue to apply to clients in FATF non-compliant countries.(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

SEBI's proposal to allow Non-Resident Indians (NRIs) and other eligible overseas investors to complete KYC digitally from their country of residence could reduce the time and paperwork involved in investing in Indian markets, Zerodha founder and CEO Nithin Kamath said.Kamath welcomed the proposal in a social media post, saying it could address a long-standing hurdle for overseas investors seeking to open accounts in India.SEBI last week issued a consultation paper titled "Review of Know Your Client Process for Individual Persons Resident Outside India". It proposed relaxing the existing requirements for individual persons resident outside India, including NRIs, Overseas Citizens of India (OCIs) and foreign nationals living abroad in countries compliant with the Financial Action Task Force (FATF).Also Read: RBI to close FCNR(B) forex swap facility early after strong dollar inflow"SEBI just released a consultation paper proposing a fully digital onboarding process for NRIs, without needing them to be physically present in India! Kudos to SEBI for this pragmatic move," Kamath said.Under the proposed framework, eligible investors could complete the KYC process digitally while staying in their country of residence.SEBI said the existing digital onboarding process poses a hurdle because intermediaries are required to capture the client's latitude and longitude within India. The proposed change seeks to remove this requirement for eligible investors who are overseas.Also Read: Global banks are pulling back credit cards once prized by rich IndiansKamath said the move could help expand the flow of NRI capital into Indian markets."This is huge because NRIs tend to have large amounts of capital to invest and are a highly durable source of inflows into Indian markets," he said.He said earlier regulatory changes had simplified the investment process for NRIs, but account onboarding remained a challenge for those living overseas."Something that would take 2-3 weeks or even months could be done within 1-2 days. That's a big win," he said.According to Kamath, NRI investors generally invest higher amounts and tend to take a longer-term approach than regular investors.He said most NRI investors now use NRO Non-PIS accounts, following earlier SEBI changes that removed the need for the broader Portfolio Investment Scheme (PIS) process. Such accounts, he said, offer access to intraday trading, BTST and futures and options without requiring a CP code.For NRIs living abroad, however, the onboarding process can still require physical documentation and international courier services. This can add weeks to the account-opening process."But one massive bottleneck has remained: onboarding," he said.The proposed framework could allow eligible investors to complete the process, including e-signatures, from their country of residence."By removing all this friction, this investor base can easily be many times larger," Kamath said.He said easier access for overseas investors could also support foreign capital flows into India."Getting foreign money into India matters. It helps the investors, but it also helps the rupee and the larger India story. Anything that makes it easier for this money to come into India is worth doing," he said.The proposal is currently under consultation. The proposed relaxation would cover individual overseas investors based in FATF-compliant countries, while existing KYC requirements would continue to apply to clients in FATF non-compliant jurisdictions.