Review of Know Your Client Process for Individual Person Resident Outside India Clients

Background

● SEBI Master Circular dated October 12, 2023, previously restricted digital KYC by requiring the client's physical presence in India during on-boarding.

● Market participants submitted representations highlighting difficulties faced by Non-Resident Indians, Overseas Citizens of India, and foreign nationals during remote account opening.

● The regulatory review aims to ease the on-boarding process for individual Persons Resident Outside India while maintaining stringent anti-money laundering standards.

What Has Changed

● PAN Collection & Verification: Intermediaries shall collect PAN and verify it with the Income Tax Database without insisting on physical copies. KRA shall verify PAN and name, tagging the attribute as validated.

● Passport & OCI: Intermediaries shall collect copies of the Passport and Overseas Citizen of India card where applicable, verifying them if feasible. KRA shall also verify passports and tag the attribute as validated.

● KYC Form & Signature: KYC information shall be collected via physical, scanned, or digital modes under electronic signature. Specimen signatures may be collected as wet signatures or cropped images under electronic signature, with wet signatures executed during VIPV for digital submissions.

● Proof of Identity and Address: Officially valid documents or deemed officially valid documents must be collected, with current addresses for PROI clients being overseas addresses. Foreign national address proofs can include government-issued foreign documents or embassy letters.

● OSV & Authentication: Original documents must be seen and verified, or equivalents accepted via DigiLocker, verifiable mechanisms, Aadhaar e-KYC authentication, or certification by authorized authorities like Notaries or Indian Embassies.

● Mobile & Email Verification: Mobile numbers and email IDs must be collected and verified via OTP or verifiable mechanisms. Unverified mobile numbers require all communications to be routed through verified email IDs.

● Video In Person Verification (VIPV): Permitted when physical IPV is not feasible, subject to stringent safeguards including client consent, random action initiation, geo-tagging, anti-spoofing controls, IP address validation from India or FATF-compliant countries, face liveness checks, and concurrent audits.

● Timeline & Language: Intermediaries must provide updated KYC information to KRA within 3 working days of completion. All submitted documents must be in English or translated and attested by a certifying authority.

Who Is Affected

● All intermediaries registered with SEBI under Section 12 of the SEBI Act, 1992.

● Recognised Stock Exchanges, Recognised Clearing Corporations, and all Depositories.

● Individual Persons Resident Outside India (PROIs), including Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and foreign nationals.

● Expressly excluded: Clients residing in FATF non-compliant countries, whose extant KYC processes continue to apply.

Compliance Action Points & Deadlines

1. Retrieve existing records: Seek PAN and CKYC ID from the client, and retrieve records from KRA and CKYCRR before initiating account-based relationships or updates.

2. Obtain missing or updated details: Collect additional details only upon record changes, incomplete details, lapsed document validity, or for enhanced due diligence.

3. Submit to KRA: Provide updated KYC information to KRA within 3 working days from the date of completion of the KYC process.

4. Ensure Infrastructure Compliance: Verify that KYC infrastructure complies with SEBI's Cyber Security and Cyber Resilience Framework.

5. Consequence of Default: Failure to comply with SEBI circular mandates may invite regulatory action, penalties, or suspension of intermediary registration under the SEBI Act, 1992.

Analysis & Impact

● For CA / CS / Tax & Legal Professionals: Review client on-boarding protocols for NRIs and foreign nationals to incorporate digital submission workflows from FATF-compliant countries. Ensure compliance with KRA attribute validation tagging and 3-day reporting windows.

● For Businesses & Investors: Streamlines capital market participation for global investors, NRIs, and OCIs by eliminating mandatory physical presence in India during digital account opening.

● For News Readers: SEBI has simplified digital investment access for overseas Indians and foreign nationals residing in compliant jurisdictions.

● Points to Watch: Implementation of technical modifications by KRAs and intermediaries ahead of the 03 December 2026 effective date.