Sebi Considers Digital Onboarding to Enhance Participation of Individual Foreign Investors in Securities Market.

The recent proposal by the Securities and Exchange Board of India (Sebi) to streamline the onboarding process for individual foreign investors marks a significant shift toward digital facilitation in the Indian securities market. By introducing video-based customer identification and verification (VIPV), Sebi aims to enhance participation from Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and foreign nationals. This development highlights Sebi’s commitment to creating a more accessible environment for foreign investments, which could lead to increased capital inflow into the Indian markets.

The proposed measures include reliance on KYC validated by other Sebi-registered intermediaries and KYC Registration Agencies (KRAs), allowing intermediaries to ease the administrative burden while maintaining compliance with regulatory standards. The accountability for KYC verification, however, will rest on the intermediaries, who are required to implement enhanced measures tailored to each client’s risk profile. This dual approach could foster a more efficient onboarding process while safeguarding against potential risks, thus appealing to a broader range of investors.

In addition, the framework ensures that clients with special needs are adequately accommodated during the verification process, reflecting a progressive regulatory stance. While the onboarding provisions will not extend to residents of FATF non-compliant countries, the initiative signifies a decline in barriers for compliant international investors, potentially boosting India’s attractiveness as an investment destination. Sebi’s invitation for public comments until September 4 indicates an open regulatory approach, aiming to refine these guidelines in alignment with stakeholder feedback.