Startup Policy Forum submits recommendation to Sebi, finance ministry to ease KYC norms for NRIs investing in India

Startup Policy Forum (SPF), an alliance representing India’s new-age companies, has submitted a memorandum to the Securities and Exchange Board of India (Sebi) and the finance ministry highlighting the operational challenges faced by non-resident Indians (NRIs) in completing KYC and digital onboarding processes for accessing Indian financial services. The industry body has also made suggestions to ease these frictions.

“We share this in the spirit of supporting a more seamless, accessible and fully digital onboarding framework for NRIs participating in India’s financial services ecosystem,” reads the internal document reviewed by . Mint.

The move is well-timed as the central bank on Friday proposed allowing NRIs and Overseas Citizens of India (OCIs) to invest more in shares of listed Indian companies without registering with Sebi as foreign portfolio investors. Currently, an NRI or OCI can own up to 5% of the shares of a listed company through the Portfolio Investment Scheme (PIS). The Reserve Bank of India (RBI) has suggested that this limit be doubled to 10% for each investor.

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Among the fixes suggested by the SPF are removing the India-only geotagging requirement for NRI video KYC, allowing verification of wet signatures uploaded during video calls instead of Aadhaar-based e-signatures, and making Sebi and IFSCA’s KYC systems interoperable so that NRIs approved under one framework do not have to restart the process under the other framework.

Foreign portfolio investors (FPIs) sold Indian stocks at almost their value ₹2.25 trillion in 2026. This exceeded the total output. ₹1.66 trillion in 2025.

But industry executives argue that easing investment norms alone may not be enough to attract more NRI participation unless hurdles related to onboarding and KYC are also addressed.

Why might looser rules not be enough?

“Our members, including some of India’s largest investment platforms, are telling us that this friction is real and that there is no need for it to lose inflows to India,” said Shweta Rajpal Kohli, president and CEO of Startup Policy Forum. The diaspora is a natural pool of patient capital at a time when Indian markets need it most, but NRI investors face unnecessary friction, Kohli said, adding that regulatory fixes are small relative to the opportunity.

One of the most important suggestions in the note is to relax. Geotagging requirements for NRI KYC. As per Sebi’s KYC Master Circular, Video-Based Customer Identification Process (V-CIP) applications must geo-tag a customer’s live GPS location and verify that the individual is physically present in India.

As a result, NRIs residing abroad cannot complete the new digital onboarding process for a securities account from their country of residence, regardless of their jurisdiction or financial crime risk profile.

During Ankur Choudhary, co-founder and CEO of Belong, an investment app based in GIFT City, says video-based KYC has made account opening much smoother for Indians living in the country, while the need to verify the user’s location prevents NRIs from completing the same process from abroad. “The only alternative for them (NRIs) is to follow the offline process of couriering notarized KYC documents and account opening forms,” he said.

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This creates a difference with the framework followed by the International Financial Services Centers Authority (IFSCA). GIFT City, which allows fully digital video KYC for new NRI customers residing in select overseas jurisdictions, is considered to have lower anti-money laundering (AML) risk.

Aadhaar issue

Another challenge highlighted by the industry is related to Sebi’s digital KYC process, which requires investors to sign account opening documents electronically. Although multiple forms of digital signatures are allowed, most financial intermediaries rely on Aadhaar-based eSignature as it is the most widely adopted and integrated option.

This works for established Indians but often creates hurdles for NRIs, industry executives say. “When it comes to NRIs, most of them do not have Aadhaar and even if they do, it can be difficult to get OTPs (one-time passwords) linked to Aadhaar while abroad. As a result, much of the process becomes physical,” said Kranthi Bathini, Director, Equity Strategy, WealthMills Securities Pvt. Ltd.

The document submitted to the government proposes allowing NRIs to upload a copy of their physical signature online.

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Another challenge is that GIFT City and Sebi follow separate KYC and regulatory systems. This means that an NRI who has already completed KYC in one system may have to repeat the entire process to access products in the other system. “This lack of interoperability creates duplication and prevents investors from experiencing a truly unified investment journey in Indian financial markets,” Belong’s Choudhary said. To address this issue, the policy note suggested that Sebi and the International Financial Services Centers Authority should work together to make KYC systems interoperable.