No need to be in India for KYC update? SEBI plans big relief for NRIs

Markets regulator SEBI on Thursday proposed relaxing the requirement that non-resident Indian (NRI) clients be physically present in India during KYC modifications and re-KYC carried out through digital onboarding or the Video Client Identification Process (V-CIP).

The move follows multiple representations from stakeholders seeking to simplify compliance norms for overseas investors.

What is SEBI proposing for NRI investors?

Currently, intermediaries are required to ensure that NRI clients undergoing KYC (Know Your Client) or re-KYC are physically located within India through geo-tagging features in their digital identification applications.

In a draft circular, SEBI said the existing prescription that the client’s physical location be in India during digital onboarding would be relaxed for existing clients undertaking re-KYC or KYC modifications.

Safeguards for digital verification still apply

Sebi has also proposed that applications used for the video identification process continue to include safeguards such as random action prompts to ensure that interactions are not pre-recorded.

The draft also requires that the GPS coordinates captured by the intermediary’s app match the latitude and longitude of the country recorded in the client’s proof of address, and that the app prevent connections from spoofed IP addresses, the circular said.

The Securities and Exchange Board of India (SEBI) said it has sought comments on the draft circular by November 13.

In a separate consultation paper, SEBI has proposed to standardise the process for opening mutual fund folios and executing the first investment, aiming to ensure these folios are created only after verification.

The proposal seeks to address issues arising from cases where folios are opened before the completion of KYC verification by KYC Registration Agencies (KRAs).

The regulator has proposed that AMCs create folios only after receiving and verifying account opening documents as per the Know Your Client (KYC) norms.

The KYC documents will then be sent to KRAs for final verification, and the first investment will be permitted only after the KRA marks the folio as KYC compliant in its system, it said.

Further, investors will be informed at every stage of the KYC process through registered email and mobile numbers. AMCs and KRAs have been directed to align their systems and workflows with these proposed norms.