SEBI's proposal to allow Non-Resident Indians (NRIs) and other eligible overseas investors to complete KYC digitally from their country of residence could reduce the time and paperwork involved in investing in Indian markets, Zerodha founder and CEO Nithin Kamath said.
Kamath welcomed the proposal in a social media post, saying it could address a long-standing hurdle for overseas investors seeking to open accounts in India.
SEBI last week issued a consultation paper titled "Review of Know Your Client Process for Individual Persons Resident Outside India". It proposed relaxing the existing requirements for individual persons resident outside India, including NRIs, Overseas Citizens of India (OCIs) and foreign nationals living abroad in countries compliant with the Financial Action Task Force (FATF).
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"SEBI just released a consultation paper proposing a fully digital onboarding process for NRIs, without needing them to be physically present in India! Kudos to SEBI for this pragmatic move," Kamath said.
Under the proposed framework, eligible investors could complete the KYC process digitally while staying in their country of residence.
SEBI said the existing digital onboarding process poses a hurdle because intermediaries are required to capture the client's latitude and longitude within India. The proposed change seeks to remove this requirement for eligible investors who are overseas.
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Kamath said the move could help expand the flow of NRI capital into Indian markets.
"This is huge because NRIs tend to have large amounts of capital to invest and are a highly durable source of inflows into Indian markets," he said.
He said earlier regulatory changes had simplified the investment process for NRIs, but account onboarding remained a challenge for those living overseas.
"Something that would take 2-3 weeks or even months could be done within 1-2 days. That's a big win," he said.
According to Kamath, NRI investors generally invest higher amounts and tend to take a longer-term approach than regular investors.
He said most NRI investors now use NRO Non-PIS accounts, following earlier SEBI changes that removed the need for the broader Portfolio Investment Scheme (PIS) process. Such accounts, he said, offer access to intraday trading, BTST and futures and options without requiring a CP code.
For NRIs living abroad, however, the onboarding process can still require physical documentation and international courier services. This can add weeks to the account-opening process.
"But one massive bottleneck has remained: onboarding," he said.
The proposed framework could allow eligible investors to complete the process, including e-signatures, from their country of residence.
"By removing all this friction, this investor base can easily be many times larger," Kamath said.
He said easier access for overseas investors could also support foreign capital flows into India.
"Getting foreign money into India matters. It helps the investors, but it also helps the rupee and the larger India story. Anything that makes it easier for this money to come into India is worth doing," he said.
The proposal is currently under consultation. The proposed relaxation would cover individual overseas investors based in FATF-compliant countries, while existing KYC requirements would continue to apply to clients in FATF non-compliant jurisdictions.
