SEBI Proposes Digital KYC for NRIs, OCIs and Foreign Nationals Outside India

The Securities and Exchange Board of India (SEBI) has proposed a new digital Know Your Customer (KYC) route for individual Persons Resident Outside India (PROI). The proposal covers Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and foreign nationals who are outside India and want to enter or maintain an account-based relationship in the Indian securities market.

The proposal under consideration is straightforward. An eligible offshore client need not come all the way to India to perform digital KYC. SEBI is looking into the possibility of permitting digital KYC from an FATF-compliant jurisdiction, based on document verification, VIPV, location matching, spoofing measures, audit, and cybersecurity measures.

It is not the end of the story yet. SEBI came out with a consultation paper and Press Release No. 46/2026 on 14th August 2026. Comments can be provided to SEBI till 4th September 2026.

Notification at a Glance

The September 4 date is the deadline for submitting comments. It is not the date on which the proposed KYC system becomes mandatory.

Document Status and Enforceability

SEBI has invited public views on a set of proposals and attached a draft circular to the consultation paper. The draft describes how the framework could operate if SEBI decides to issue it in final form. Until that happens, businesses should not present the proposals as current law.

The draft circular says that the new provisions would take effect 30 days after the final circular is issued. However, the issue date and corresponding effective date are left blank. Therefore, there is presently no confirmed commencement date.

For now, intermediaries should continue following the existing KYC framework. They may assess technology, documentation, risk and operational changes that could be needed if the draft is finalised. Investors and industry bodies may also submit comments by the stated deadline.

The Regulatory Framework

SEBI sets out the KYC process for securities-market clients. It deals with KYC forms, supporting documents, verification, the duties of intermediaries and validation of records by KYC Registration Agencies (KRAs). The framework is aligned with the Prevention of Money Laundering Act, 2002 and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

The existing digital KYC process generally requires the intermediary's application to confirm that the client is physically located in India. That condition creates a practical barrier for a person who lives abroad and wants to complete the entire onboarding process remotely.

SEBI had already provided limited relief on December 10, 2025. That circular relaxed the India geo-location condition for an existing NRI client undertaking re-KYC. The present consultation goes further: it considers a wider process for first-time KYC and re-KYC of NRIs, OCIs and foreign nationals in FATF-compliant jurisdictions. 

The consultation also refers to the Foreign Exchange Management Act, 1999, the Information Technology Act, 2000, the SEBI (KYC Registration Agencies) Regulations, 2011 and the Central KYC Records Registry (CKYCRR). These connected frameworks matter because overseas status, electronic signatures, source verification and sharing of KYC records do not sit within SEBI's KYC circular alone.

Key Definitions in Simple Language

• Person Resident Outside India

For this consultation, an individual PROI includes an NRI, an OCI and a foreign national located outside India. The expression “person resident outside India” comes from section 2(w) of the Foreign Exchange Management Act, 1999.

• KYC Registration Agency

A KYC Registration Agency, commonly called a KRA, maintains KYC records for the securities market. It verifies available attributes against official or source databases and makes the record available to intermediaries under the applicable framework.

• Officially Valid Document

An Officially Valid Document, or OVD, is a document recognised under the Prevention of Money Laundering Rules for identity or address verification. The proposed process also refers to deemed OVDs and equivalent electronic documents.

• CKYC ID and CKYCRR

A CKYC ID is the unique identifier assigned through the Central KYC Records Registry. Under the proposal, an intermediary would ask for this ID when available and use the KRA channel to retrieve CKYCRR records.

• Video In-Person Verification

VIPV is a live video process used by an authorised official of an intermediary to verify the client. The draft does not treat it as a casual video call. It proposes consent, live-action checks, location controls, encryption, anti-spoofing measures and concurrent audit.

• FATF-compliant country

The draft links overseas digital onboarding to the country status published by the Financial Action Task Force. Clients in FATF non-compliant countries would remain under the existing KYC process.

Who Would Be Covered?

The proposed framework is aimed at individual PROI clients who are outside India and seek securities-market onboarding or re-KYC through a SEBI-registered intermediary.

The proposal does not create a general exemption from KYC. It changes the possible location and method of completing the process. Identity checks, documentation, risk assessment, verification and intermediary responsibility would continue.

How the Existing First-Time KYC Process Works

The consultation paper describes seven broad stages in a first-time KYC process:

• Filling and signing the KYC form
• Providing self-attested OVDs or supporting documents
• Verification of original documents
• In-person verification, including a liveness check and additional due diligence
• Uploading the record to the KRA database
• Verifying KYC information against source databases
• Creating the KYC record

An overseas client can presently use a physical route, such as visiting an intermediary's office or providing certified documents. In some situations, documents must be certified and sent to India. A fully digital route is difficult because the existing process checks that the client is physically in India.

SEBI identifies practical problems with courier delays, document certification, overseas mobile verification, availability of Aadhaar-linked services and repeated KYC when records are not fully validated. The proposal seeks to reduce these difficulties without removing customer-identification and anti-money-laundering controls.

Why SEBI Is Reviewing the Process

SEBI says it received representations seeking relief from the requirement that an overseas client be in India during digital onboarding. Stakeholders also raised concerns about original-document verification, signatures and KYC portability.

The consultation links the review to wider efforts to make participation in Indian securities easier for the overseas Indian community and eligible foreign nationals. It also refers to changes announced for overseas investment in listed Indian companies and the June 12, 2026 amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

The intended balance is clear: reduce unnecessary physical and paper-based steps while retaining reliable identity checks, risk-based due diligence and secure video verification.

What SEBI Has Proposed?

These points remain proposals. The detailed draft circular shows SEBI's intended operating model, but the final text may differ.

Proposal-Wise Analysis

Digital KYC from Outside India

The draft would remove the need for an eligible PROI client to be physically present in India during digital onboarding. The intermediary could accept KYC information and related documents from a client located in a FATF-compliant country.

This is a location relaxation, not a KYC waiver. The intermediary would still need to identify the client, verify identity, understand the purpose and intended nature of the relationship, and apply enhanced measures where the risk profile requires them.

PAN and Passport Requirements

PAN would continue to be collected and checked against the Income Tax database. The intermediary would not need to insist on the original PAN card or a copy once the information is verified through the database. The KRA would also verify the PAN and the client's name and mark the verified attributes as validated.

NRIs, OCIs and foreign nationals would continue to provide a passport copy. An OCI card would also be collected where applicable. If a passport is shared through DigiLocker and can be verified, the KRA would tag that attribute as validated.

KYC Form and Electronic Signature

The intermediary could collect KYC information using the CKYC template for individuals. The form could be received as:

• An original physical form
• A scanned physical form submitted under electronic signature
• A digital KYC form submitted under electronic signature

The term electronic signature would carry the meaning given in the Information Technology Act, 2000. The practical availability of some foreign electronic-signature routes may still depend on recognition and technical arrangements outside SEBI's direct control.

Specimen Signature During VIPV

The proposal would allow a client to provide either a wet signature on a physical form or a cropped image of the specimen signature under electronic signature.

Where the signature is submitted digitally, the client would make a wet signature in front of the intermediary during VIPV. The intermediary would compare it with the submitted specimen. This is intended to preserve a live verification step even when the onboarding begins online.

Overseas Address and Self-Declaration

For a PROI client, the current address is expected to be an overseas address. The client would provide an OVD or deemed OVD for identity and address.

If a foreign national's OVD does not contain an address, the draft allows the intermediary to collect a document issued by a foreign government department or a letter issued by a foreign embassy or mission in India.

The client may self-declare a current address that differs from the address on the submitted OVD, but only where that OVD can be verified through an official or source database. This proposed relief does not remove the need to provide identity documentation.

Original Seen and Verified Alternatives

Where the original document is not produced, the draft lists alternative routes:

• An equivalent e-document obtained through DigiLocker
• An equivalent e-document issued by the issuing authority through a verifiable mechanism
• OTP-, biometric- or face-authentication-based Aadhaar e-KYC
• A copy attested by a recognised certifying authority

The proposed certifier list includes a notary public, an authorised official of an overseas branch of an Indian scheduled commercial bank, an eligible branch of an overseas bank having a relationship with an Indian bank, a court magistrate, a judge, and the Indian embassy or consulate general in the client's country of residence.

The intermediary would record the authorised official's details and the date and time of Original Seen and Verified checks.

Mobile Number and Email Verification

The intermediary would collect both the client's mobile number and email address. The mobile number would be verified if feasible, while email verification would remain expected through OTP or another verifiable mechanism. The KRA would follow a similar approach and tag verified attributes accordingly.

This proposal recognises that sending or receiving an OTP on a foreign mobile number can be difficult or costly. It does not suggest that intermediaries should stop collecting the mobile number.

Portable KYC Records

Under the existing framework, a fully validated KYC record is portable, meaning the client generally does not repeat the entire process with another intermediary. For a PROI client, validation of every attribute can be difficult because overseas mobile numbers, addresses or documents may not be verifiable against Indian databases.

SEBI proposes treating PROI KYC records as portable while showing which individual fields have been source-verified or validated. A new intermediary could use the existing record and carry out additional checks based on its own risk assessment.

Portability would therefore reduce repetition, but it would not eliminate an intermediary's right or duty to request additional information where the record is incomplete, out of date, inconsistent or high risk.

Reliance on KYC Performed by Other Financial-Sector Entities

An intermediary may be allowed to rely on KYC completed by another SEBI-registered intermediary, using the record obtained from a KRA. It may also rely on KYC performed by an entity regulated by the Reserve Bank of India, Insurance Regulatory and Development Authority of India, Pension Fund Regulatory and Development Authority, or International Financial Services Centres Authority, using records obtained from CKYCRR through the KRA.

The intermediary would still carry ultimate responsibility for its client. It would need to apply enhanced KYC measures proportionate to the risk. Reliance on an existing record is therefore an efficiency measure, not a transfer of accountability.

KRA Upload and Record Updating

The draft would require the intermediary to submit completed PROI KYC information to the KRA within three working days from completion of the KYC process. Where an existing record changes, the intermediary would provide the update to the KRA. The KRA would update the record and inform other intermediaries that maintain an account-based relationship with the client.

The draft also envisages KRAs furnishing KYC information and updates to CKYCRR after the KRAs are integrated with that registry.

VIPV and Cybersecurity Safeguards

The proposed VIPV process is one of the most operationally important parts of the consultation. Where physical IPV is not feasible, the intermediary would conduct VIPV and build a verifiable record of the process.

The draft safeguards include:

• Recording client consent in an auditable, alteration-resistant manner
• Using random live actions to show that the interaction is not pre-recorded
• Making an uninterrupted video recording with live GPS coordinates, date and time
• Using tamper-resistant technology
• Blocking spoofed IP addresses, virtual private networks and proxy servers
• Confirming that the IP address originates in India or a FATF-compliant country
• Matching the detected country with the KYC form and address document
• Clearly capturing and matching the client's face with the submitted photograph
• Using end-to-end encryption between the customer's device and the intermediary's hosting point
• Requiring an authorised official of the intermediary to conduct the VIPV
• Using face-liveness and spoof-detection controls that do not exclude persons with special needs

Subjecting the process to concurrent audit

Intermediaries could add further controls under their risk-management policy. The technology used for KYC would also have to comply with SEBI's Cybersecurity and Cyber Resilience Framework.

For intermediaries, this means the proposal could reduce paper and travel barriers but increase responsibility for secure video infrastructure, location assurance, evidence retention, access controls and audit readiness.

What Would Remain Unchanged?

The consultation does not propose abandoning core KYC requirements. Several controls would remain:

• PAN would continue to be mandatory for securities-market participants, subject to existing exemptions.
• NRIs, OCIs and foreign nationals would continue to provide a passport copy.
• OCI clients would provide an OCI card where applicable.
• Overseas address evidence would remain relevant.
• Intermediaries would continue to perform IPV or VIPV as applicable.
• Risk-based and enhanced due diligence responsibilities would remain with the intermediary.
• Clients in FATF non-compliant countries would continue under the existing process.
• Foreign nationals applying as Foreign Portfolio Investors would remain governed by the separate FPI framework.

The proposal therefore changes how eligible overseas clients may complete KYC, not whether KYC is required.

Proposed Timeline and Transitional Treatment

The draft also says that the 2023 KYC Master Circular and the December 10, 2025 NRI re-KYC circular would be superseded only to the extent covered by the new final provisions.

How to Submit Public Comments?

SEBI seeks views on the main question of whether an intermediary should be allowed to onboard an individual PROI digitally without physical presence in India when the client is in a FATF-compliant country.

It also invites comments on:

• Digital acceptance of KYC forms and OVDs under electronic signature
• Acceptance of a cropped specimen-signature image followed by wet-signature verification during VIPV
• Possible relaxation in mobile-number verification
• Mandatory collection of email addresses
• Expansion of the document-certifier list to eligible overseas-bank officials
• Self-declaration of a current address where the OVD is source-verifiable
• Whether further VIPV safeguards are needed
• Whether KRAs should share PROI records that are not fully validated or source-verified
• Any additional comments on the proposed onboarding process

Comments should be filed through SEBI's public-comment portal by September 4, 2026. The consultation paper provides email contacts for technical problems with the portal; these emails are for submission difficulties and should not be treated as the primary filing route where the portal works.

Drafting Inconsistency in the Consultation Paper

The consultation paper contains inconsistent references to the earlier NRI re-KYC circular. One passage refers to December 10, 2026, while a related footnote refers to December 30, 2025. SEBI's published circular is dated December 10, 2025, and the consultation paper itself uses that date correctly in other places.

This appears to be a drafting inconsistency in the consultation paper. It does not change the central proposal, but a publication-ready analysis should use December 10, 2025 when referring to the official circular and acknowledge the inconsistency where detailed legal review is relevant.

Impact on Investors and Regulated Entities

NRIs, OCIs and Foreign Nationals

Eligible overseas investors could complete KYC without travelling to India or relying as heavily on physical courier processes. They may also benefit from greater KYC portability when moving between securities-market intermediaries.

The benefit would depend on the investor's country, available documents, access to acceptable electronic verification and successful completion of VIPV. A person in a FATF non-compliant country would not receive the proposed location relaxation.

SEBI-Registered Intermediaries

Brokers, depository participants, mutual-fund intermediaries and other covered entities may gain access to a smoother overseas onboarding route. They would, however, need to update procedures, applications, customer communication, risk engines and audit controls.

Intermediaries would remain responsible for client KYC even when they rely on records produced by another regulated entity. They would need clear rules for accepting a record, requesting further information and applying enhanced due diligence.

KYC Registration Agencies

KRAs would need to support attribute-level validation and portability. Their systems may need to show clearly which fields have been checked against an official source and which have not. They would also play a central role in passing CKYCRR records to intermediaries and distributing updates.

Technology, Cybersecurity and Audit Teams

These teams would need to translate the VIPV safeguards into working controls. Important areas include secure video capture, consent records, GPS and IP checks, VPN and proxy detection, end-to-end encryption, liveness detection, accessibility, evidence retention and concurrent audit.

Benefits and Implementation Challenges

The proposal could make securities-market access easier for overseas individuals while reducing paper movement and repeated verification. It may also help intermediaries serve overseas clients more efficiently.

Likely benefits include:

• Remote onboarding from an eligible overseas location
• Reduced travel and courier dependence
• Wider use of electronic documents and signatures
• Better reuse of available KYC records
• More transparent tagging of verified attributes
• A defined route for relying on other financial-sector KYC records
• Clearer video-verification safeguards

Implementation will still require careful work. Intermediaries may face challenges in verifying foreign contact details, determining FATF-country status, recognising acceptable documents, integrating KRA and CKYCRR data, testing anti-spoofing tools and supporting clients with limited access to Indian mobile-linked services.

The proposed framework is therefore not simply a relaxation. It exchanges some physical-process burdens for stronger technology, evidence and risk-management expectations.

What Stakeholders Should Do Next

Because the consultation is not yet binding, the immediate task is review and preparation rather than implementation.

For SEBI-Registered Intermediaries

• Compare the draft with current KYC and re-KYC procedures.
• Identify every system rule that assumes the client must be in India.
• Assess whether the VIPV platform can capture consent, live actions, GPS, IP location, facial matching and tamper-resistant records.
• Review VPN, proxy and spoofed-IP detection.
• Map KRA and CKYCRR integration gaps.
• Define when additional KYC or enhanced due diligence would be required.
• Estimate training, audit and customer-support requirements.
• Submit evidence-based comments before September 4, 2026, where operational concerns exist.

For KRAs

• Review readiness for attribute-level validation and portable PROI records.
• Assess how unvalidated fields will be displayed and shared.
• Evaluate CKYCRR integration and update-notification workflows.
• Consider whether three-working-day submissions and downstream updates require system changes.

For NRIs, OCIs and Foreign Nationals

• Do not assume the proposed digital route is already available.
• Continue following the process communicated by the chosen intermediary.
• Keep PAN, passport, OCI card where applicable, overseas-address evidence and contact details current.
• Monitor SEBI's website for a final circular.
• Submit comments if the proposed process creates a practical concern that SEBI should consider.

How Corpseed Can Help?

The proposed framework requires businesses to read the consultation, the draft circular and the existing KYC rules together. Corpseed can support intermediaries and related businesses through focused securities regulatory compliance services without treating the draft as a final obligation.

Corpseed can assist with:

• Applicability and stakeholder assessment
• Clause-wise review of the consultation paper and draft circular
• Comparison with current KYC and re-KYC procedures
• Consultation-response drafting and submission support
• KYC process and documentation gap assessment
• VIPV control and audit-readiness review
• KRA and CKYCRR workflow assessment

Internal policy, standard operating procedure and customer-communication updates after the final circular is issued

Professional review can help an intermediary identify technical and operational concerns early, present clear comments to SEBI and avoid building a process around provisions that may still change. Businesses seeking securities regulatory compliance services may contact Corpseed for a document-specific assessment of the proposed PROI KYC framework.

Key Takeaways

SEBI's August 14, 2026 consultation proposes allowing individual NRIs, OCIs and foreign nationals in FATF-compliant countries to complete securities-market KYC digitally without being physically present in India. It also proposes electronic document submission, address self-declaration in a limited case, portable KYC records, cross-regulator reliance and detailed VIPV controls.

• The framework is a proposal, not a final binding rule.
• Public comments are due by September 4, 2026.
• The overseas digital route would be limited to India and FATF-compliant countries.
• Core identity, document, IPV and risk-based KYC duties would continue.
• Intermediaries would retain ultimate responsibility even when using third-party KYC records.
• The final circular, if issued, is proposed to take effect 30 days after its issue date.
• Investors and intermediaries should monitor the final SEBI decision before changing their process.