Zerodha CEO Nithin Kamath lauds SEBI’s proposal for a fully digital KYC process for NRIs and overseas investors, stating it could remove a major hurdle and significantly boost the flow of durable overseas capital into Indian markets.
SEBI’s proposal to allow Non-Resident Indians (NRIs) and other eligible overseas investors to complete their KYC digitally without being physically present in India could make it easier and faster for overseas money to enter Indian markets, Zerodha Founder and CEO Nithin Kamath said.
Kamath welcomed SEBI’s move in a social media post, saying the proposal could remove a long-standing hurdle faced by NRIs seeking to invest in India.
Details of SEBI’s Proposal
Last week, SEBI released a consultation paper, “Review of Know Your Client Process for Individual Persons Resident Outside India” and proposed the relaxation for individual Persons Resident Outside India, including NRIs, Overseas Citizens of India (OCIs) and foreign nationals living abroad, in countries compliant with the Financial Action Task Force (FATF). “SEBI just released a consultation paper proposing a fully digital onboarding process for NRIs, without needing them to be physically present in India! Kudos to SEBI for this pragmatic move,” Kamath said.
Under the proposal, eligible overseas investors would be able to complete KYC digitally from their country of residence. SEBI said the current requirement for digital onboarding creates a hurdle because intermediaries need to capture the latitude and longitude of the client within India. The proposed relaxation is aimed at removing this requirement for eligible investors located overseas.
A ‘Huge’ Move for Indian Markets
Kamath said the change could be significant because NRIs represent an important source of capital for Indian markets. “This is huge because NRIs tend to have large amounts of capital to invest and are a highly durable source of inflows into Indian markets,” he said.
He cited Zerodha’s own NRI investor base to explain the potential. According to Kamath, more than 50,000 NRIs are currently investing through Zerodha, with around 80 per cent of them being active. “A stat that surprised me when we looked at our numbers: ~80% of them are active. That’s a ridiculous number,” Kamath said.
He added that NRI investors tend to invest more, take a longer-term approach and appear to be more persistent investors compared with regular investors.
According to Kamath, the number of NRIs investing through Zerodha has increased significantly over the last few years, helped by earlier changes that made the investment process simpler. He said most NRIs now invest through NRO Non-PIS accounts, after earlier SEBI changes removed the need for the entire PIS setup. These accounts, he said, function much like resident accounts, with access to intraday, BTST and F&O, without the need for a CP code.
Addressing the Onboarding Bottleneck
However, Kamath identified onboarding as the major remaining hurdle. “But one massive bottleneck has remained: onboarding,” he said. At present, an NRI seeking to open an account digitally needs to be physically present in India. For those living abroad, the process involves physical documentation and international courier services, which can add significant delays.
Kamath said SEBI’s proposal could address this problem by allowing e-signatures directly from the client’s country of residence. “Something that would take 2-3 weeks or even months could be done within 1-2 days. That’s a big win,” he said.
He said reducing the paperwork and delays could significantly expand the NRI investor base. “By removing all this friction, this investor base can easily be many times larger,” Kamath said.
Wider Economic Benefits
The proposal is therefore aimed not only at making account opening easier for overseas Indians but could also improve the speed at which overseas investors access Indian securities markets. Kamath said bringing more foreign money into India has wider benefits beyond individual investors.
“Getting foreign money into India matters. It helps the investors, but it also helps the rupee and the larger India story. Anything that makes it easier for this money to come into India is worth doing,” he said.
SEBI’s proposal is currently part of the consultation process. The proposed relaxation would apply to individual overseas investors located in FATF-compliant countries, while existing KYC requirements would continue to apply to clients in FATF non-compliant countries. (ANI)
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