Startup Policy Forum Submits Recommendation to Ease Know-Your-Customer Norms for Non-Resident Indians Investing in Indian Markets

Easing Investment Norms for NRIs May Not Be Enough Without Fixing Onboarding Hurdles

The 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 proposed recommendations to ease these frictions, including 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. These fixes aim to support a more seamless, accessible, and fully digital onboarding framework for NRIs participating in India's financial services ecosystem.

The Reserve Bank of India (RBI) has proposed doubling the limit on the percentage of shares that an NRI or Overseas Citizen of India (OCI) can own in a listed company from 5% to 10% without registering with Sebi as foreign portfolio investors. This move is expected to increase investment in Indian equities, as NRIs sold Indian equities worth nearly ₹2.25 trillion in 2026, exceeding the total outflow of ₹1.66 trillion in 2025.

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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. According to Shweta Raj Kohli, president and CEO of 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, which is costing India inflows it doesn't need to lose.

The note highlights two key challenges faced by NRIs: the geo-tagging requirement for NRI KYC and the issue of Aadhaar-based e-sign. The current system requires NRIs to geo-tag their location and verify that they are physically located within India, which prevents them from completing digital onboarding from abroad. The alternative is to follow the offline process of couriering notarized KYC documents and account opening forms.

Another challenge is that Sebi's digital KYC process requires investors to electronically sign account-opening documents, which often creates hurdles for NRIs who do not have Aadhaar or face difficulties receiving OTPs linked to Aadhaar while abroad. The document recommends allowing NRIs to upload a copy of their physical signature online.

To address these challenges, the policy note suggests that Sebi and IFSCA work together to make their KYC systems interoperable, allowing NRIs who have already completed KYC in one system to access products in the other without having to repeat the entire process. This lack of interoperability creates duplication and prevents investors from experiencing a truly unified investment journey across Indian financial markets.

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