The Securities and Exchange Board of India (Sebi) is seeking to make it easier for overseas investors to open securities accounts in India, proposing to remove the physical presence and documentation hurdles that have long complicated the process.
In a consultation paper issued Friday, the market regulator proposed allowing non-resident Indians (NRIs), overseas citizens of India (OCIs) and foreign nationals in Financial Action Task Force (FATF)-compliant countries to complete securities-market KYC (know-your-customer) digitally from abroad.
Currently, digital onboarding of non-residents requires clients to be physically present in India, leaving those overseas dependent on physical processes.
Under the proposed framework, clients could submit KYC forms through an app, website or other digital mode, including electronically signed scanned forms and digital KYC forms. Sebi has also proposed accepting a cropped image of a client’s specimen signature, with the investor required to provide a wet signature during video in-person verification, or VIPV.
The regulator also wants to ease document verification. Where original documents are not physically produced, intermediaries could rely on DigiLocker documents, electronically issued documents that can be verified with the issuing authority, Aadhaar-based authentication or documents certified by specified authorities. Sebi has proposed expanding the list of certifying authorities to include authorised officials of overseas banks that have relationships with Indian banks.
Another proposed change targets mobile-number verification, a recurring hurdle for overseas investors. Intermediaries would continue to collect mobile numbers and email IDs, but mobile verification would be required only where feasible.
The market regulator has invited public comments on the proposals until 4 September.
Digital onboarding, tighter safeguards
The biggest safeguard accompanying the proposed relaxation would be VIPV. For clients in FATF-compliant countries, Sebi would remove the requirement to be physically present in India, while requiring intermediaries to put in place controls including live GPS capture, liveness checks, facial matching, protection against spoofed IP addresses, end-to-end encryption and concurrent audits.
Sebi is also proposing to make KYC records for persons residing outside India portable even when the entire record has not been validated. Instead, individual KYC attributes would be tagged based on whether they had been verified against official or source databases. This would allow another intermediary to reuse the information already available while conducting additional checks where required.
