Subheading: Financial regulators are looking to reduce documentation hurdles for overseas Indians and foreign investors, while improving access to India’s capital markets
India is planning to simplify know-your-customer (KYC) requirements and investment onboarding for non-resident Indians (NRIs) and foreign portfolio investors (FPIs), following a review by the Financial Stability and Development Council (FSDC), chaired by Union Finance Minister Nirmala Sitharaman.
The move aims to address long-standing difficulties faced by overseas investors when completing verification formalities and accessing India’s financial markets. The council discussed the need to simplify and digitise these processes at its meeting on October 23, according to reports.
NRIs have faced several hurdles in maintaining valid KYC records, even as digital verification has made investment procedures easier for resident Indians. These include difficulties in validating Indian mobile numbers and email addresses and complications arising from requirements linking Aadhaar with the Permanent Account Number (PAN).
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NRIs who are not required to enrol for Aadhaar can face particular difficulties when completing these formalities
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In some cases, their KYC status may be placed on hold, restricting financial transactions until the necessary verification is completed
Securities and Exchange Board of India (SEBI) chairman Tuhin Kanta Pandey has also identified the simplification of onboarding for NRIs as a priority for the capital markets regulator.
The latest discussions build on wider efforts to improve access for overseas investors. Earlier regulatory measures have eased certain digital KYC requirements for NRIs, including allowing existing clients to complete re-KYC or modify their records through video-based verification without being physically present in India.
In a separate development, the FSDC stressed the need to expedite the return of unclaimed financial assets to their rightful owners. These include bank deposits, dividends, shares, post office savings, insurance proceeds and pension funds.
Finance Minister Sitharaman called on ministries, regulators and other stakeholders to accelerate efforts to identify beneficiaries and return the money.
Simplifying KYC and onboarding could reduce administrative barriers for overseas Indians seeking to invest in Indian equities and other financial products. However, the practical impact will depend on the detailed measures adopted by the relevant regulators and their implementation.
The proposed simplification is part of broader efforts to strengthen India’s investment ecosystem, attract overseas capital and make financial services more accessible while maintaining appropriate safeguards against fraud and money laundering.
