Startup Policy Forum Urges Simpler KYC Norms For NRIs To Boost Investments

New Delhi, Jun 6 (KNN) Startup Policy Forum (SPF), an industry body representing India's new-age companies, has urged regulators to simplify Know Your Customer (KYC) and digital onboarding processes for Non-Resident Indians (NRIs), citing operational hurdles that may be limiting investment inflows into Indian financial markets.

Industry Body Seeks Easier Digital Onboarding For NRIs 

In a submission to the Securities and Exchange Board of India (SEBI) and the Finance Ministry, SPF highlighted several challenges faced by NRIs while accessing Indian financial services and proposed reforms to create a more seamless digital onboarding framework.

The recommendations come shortly after the Reserve Bank of India proposed increasing the investment limit for individual NRIs and Overseas Citizens of India (OCIs) in listed Indian companies under the Portfolio Investment Scheme (PIS) from 5 percent to 10 percent.

According to SPF, easing investment limits alone may not significantly improve participation unless procedural barriers related to onboarding and compliance are addressed, reported The Mint.

Call To Remove India-Only Video KYC Requirement

Among its key recommendations, the industry body has sought removal of the India-only geo-tagging requirement for video-based KYC. 

Under existing regulations, applicants undergoing the Video-based Customer Identification Process (V-CIP) must be physically located within India during verification, preventing many NRIs from completing account-opening procedures from overseas.

The forum also proposed allowing uploaded physical signatures to be verified during video KYC sessions as an alternative to Aadhaar-based electronic signatures, which many NRIs find difficult to use due to Aadhaar availability and OTP authentication challenges while residing abroad.

SPF Pushes For KYC Interoperability Across Regulators

Another recommendation relates to interoperability between the KYC systems of SEBI and the International Financial Services Centres Authority (IFSCA). 

SPF noted that investors who have already completed KYC under one regulatory framework are often required to repeat the process under the other, creating duplication and delays.

Industry participants argue that the lack of alignment between domestic capital market regulations and GIFT City-based frameworks increases compliance burdens for overseas investors.

Greater Flexibility Sought For Overseas Investors

The policy note further pointed out that while IFSCA permits fully digital onboarding for eligible NRIs residing in certain low-risk jurisdictions, similar flexibility is not available under the current SEBI framework.

SPF said that simplifying onboarding procedures and reducing compliance friction could help attract greater participation from the Indian diaspora, which is viewed as a potential source of stable long-term capital for Indian markets.

The industry body has urged regulators to consider targeted reforms that would enable NRIs to access investment opportunities more efficiently while maintaining necessary safeguards against financial crime and money laundering.

(KNN Bureau)