Summary of this article
Sebi relaxes norms for non resident Indians
NRIs no longer need to be present physically in India for re-KYC
The markets regulator, Securities and Exchange Board of India, eased norms for non-resident Indians (NRIs) in re-Know Your Customer (KYC) processes. The norms that required the individual to be physically present in India to update KYC were relaxed to make it more accessible for NRIs.
The relaxed norms will no longer require the physical presence of the client in India while undergoing digital verification under the re-KYC process.
In the circular released yesterday, Sebi said the physical location of the individual to be in India for digital onboarding was relaxed for clients undertaking re-KYC. Sebi said that the app will ensure that the GPS location captured by the app matches the location provided by the individual as address proof.
“The app shall prevent connections from spoofed IP addresses,” Sebi said.
What is Re-KYC
Re-KYC is a process that requires investors to periodically update or reconfirm their personal and financial information. These updates must be given to intermediaries such as brokers, mutual funds, banks, or other financial institutions. Updating KYC is a regulatory requirement to ensure that the records given to these intermediaries remain accurate.
With the new rule, Sebi has said that Indians who are already registered as clients with different financial institutions in India can now complete their re-KYC process digitally from outside India.
However, to ensure there is no misuse and fraud, the digital KYC app used by intermediaries should have safeguards such as time-stamped interactions, geo-tagging for verifying a genuine session, or processing random prompts. The GPS coordinates must also correspond to the country and location listed as official address proof of the client, Sebi said.
“The App shall also have features of random action initiation for client response to establish that the interactions are not pre-recorded, along with time stamping and geo-location tagging to ensure the requirements like physical location being in India, etc., are also implemented,” the circular said.
It must be noted that for new NRI clients, digital onboarding still requires them to be physically present in India.
Sebi has been taking steps to ease investments in Indian markets. Earlier this year, the markets regulator waived the requirement for NRIs to notify names of clearing members or obtain a custodial participant code for trading in the derivatives market.
Sebi chief Tuhin Kanta Pandey had also emphasized the need to create a simple and secure framework for NRIs to complete KYC processes, and aimed to encourage involvement of NRIs in the securities market.
