Startup Policy Forum (SPF), an alliance representing India's new-age companies, has submitted a note to the Securities and Exchange Board of India (Sebi) and the finance ministry, highlighting operational challenges faced by non-resident Indians (NRIs) in completing KYC and digital onboarding processes for access to Indian financial services. The industry body has also proposed recommendations to ease these frictions.
“We are sharing 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 proposed on Friday 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 a listed company's shares through the Portfolio Investment Scheme (PIS). The Reserve Bank of India (RBI) has proposed doubling this limit to 10% for each investor.
Among the fixes SPF has proposed is scrapping the India-only geo-tagging requirement for NRI video KYC, allowing uploaded wet signatures to be verified during video calls in lieu of Aadhaar-based e-sign, and making the KYC systems of Sebi and IFSCA interoperable so that NRIs cleared under one framework are not required to restart the process under the other.
Foreign portfolio investors (FPIs) sold Indian equities worth nearly ₹2.25 trillion in 2026. This exceeded the total outflow of ₹1.66 trillion in 2025.
However, industry executives argue that easing investment norms alone may not be enough to attract greater NRI participation unless onboarding and KYC-related hurdles are also addressed.
Why looser rules may not be enough
“Our members, including some of India’s largest investment platforms, are telling us this friction is real, and it’s costing India inflows it doesn’t need to lose,” said Shweta Rajpal Kohli, president and CEO, Startup Policy Forum. The diaspora is a natural pool of patient capital at a time Indian markets need it most, but NRI investors face unnecessary friction, Kohli said, adding that the regulatory fixes are small relative to the opportunity.
One of the key recommendations in the note is to relax the geo-tagging requirements for NRI KYC. Under 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 located within India.
As a result, NRIs residing overseas cannot complete fresh digital onboarding for a securities account from their country of residence, irrespective of the jurisdiction in which they live or its financial crime risk profile.
While video-based KYC has made account opening far smoother for Indians living in the country, the need to confirm a user's location keeps NRIs from completing the same process from abroad, Ankur Choudhary, co-founder and chief executive officer at Belong, a GIFT City based investment app. “The only alternative for them (NRIs) is to follow the offline process of couriering notarized KYC documents and account opening forms,” he said.
This, in turn, creates a divergence with the framework followed by the International Financial Services Centres Authority (IFSCA) at GIFT City, which permits fully digital video KYC for new NRI clients residing in specified overseas jurisdictions considered to present lower anti-money laundering (AML) risks.
The Aadhaar problem
Another challenge highlighted by the industry relates to Sebi's digital KYC process, which requires investors to electronically sign account-opening documents. While multiple forms of digital signatures are permitted, most financial intermediaries rely on Aadhaar-based e-Sign because it is the most widely adopted and integrated option.
Industry executives say this works well for resident Indians but often creates hurdles for NRIs. "As far as NRIs are concerned, most do not have Aadhaar, and even if they do, receiving OTPs (one-time passwords) linked to Aadhaar can be a challenge while abroad. As a result, much of the process ends up becoming physical," said Kranthi Bathini, director - Equity Strategy, WealthMills Securities Pvt. Ltd.
The document submitted to the government recommends allowing NRIs to upload a copy of their physical signature online.
Another challenge is that GIFT City and Sebi follow separate KYC and regulatory systems. This means an NRI who has already completed KYC in one system may have to repeat the entire process to access products in the other. “This lack of interoperability creates duplication and prevents investors from experiencing a truly unified investment journey across Indian financial markets,” said Belong’s Choudhary. To address this, the policy note has suggested that Sebi and the International Financial Services Centres Authority work together to make their KYC systems interoperable.
