The proposal is to simplify the onboarding process for PROI clients and enable seamless digital onboarding in the securities market.
Under the proposed changes, intermediaries would accept digital submission of KYC records and related documents from individual PROI clients located in FATF-compliant countries. The requirement for the investor to be in India during digital onboarding would be relaxed.
However, the regulator has specified safeguards to be brought in by intermediaries, such as a liveness check, KYC in the presence of authorised representatives, live capturing of the latitude and longitude of the client to match with the country specified in the proof of address, and prevention of connections from spoofed IP addresses.
“It is noted that as per extant RBI Master Directions on KYC, the client is required to be present in India during onboarding. Therefore, the aforementioned relaxation for PROI client from presence in India during digital KYC with securities market intermediary shall be beneficial for PROI clients who already have a bank account,” notes the Sebi consultation paper.
The proposal follows the Finance Ministry’s June amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, which permits foreign nationals to invest in Indian securities without using the Foreign Portfolio Investment (FPI) route, in order to facilitate foreign investments in the country.
The regulator noted that PROIs play a key role in the Indian securities market and represent a growing pool of investment into India.
“Enabling smooth on-boarding would enhance market participation, make investing back home easier for the Indian diaspora (NRIs and OCIs) which would lead to channelization of overseas savings into Indian capital markets,” notes the paper.
The proposal also seeks to make KYC records of individual PROIs portable. KYC Registration Agencies (KRAs) would treat all such records as portable, with individual attributes tagged as “validated” where they have been verified with an official or source database.
PROI clients would also be permitted to provide a self-declaration of their current address if the officially valid document submitted by them can be verified with an official or source database.
Sebi has proposed allowing intermediaries to rely on KYC undertaken by another Sebi-registered intermediary or an entity regulated by another financial sector regulator, based on records obtained through the KYC system.
The consultation paper said the existing requirement for digital onboarding to be conducted while the client is in India prevents PROIs outside India from completing the process digitally.
It said the review followed representations from stakeholders seeking relaxation of requirements relating to physical presence, original document verification, signatures and portability of KYC records.
