India wants NRI money to flow more easily. What SEBI’s new KYC proposal means

An Indian living in the US is checking the Indian stock market on his phone.

He likes a company. He decides to buy its shares. The money is already in his bank account. He has no problem investing in India.

But before he can make the investment, there is one thing he has to deal with first.

KYC.

He starts collecting documents. He sends them for verification. Then he is asked for another document. One form is completed, another follows. The process moves back and forth.

At some point, a simple question may come to mind:

If money can move digitally across borders, why should investing in India still be so complicated?

This is not just a problem for Indians living in the US.

NRIs in London, Singapore, Dubai and other countries can face similar difficulties when they want to invest in Indian markets.

The strange part is that the investor may already have everything needed to invest.

The money is there. The interest is there. The decision has been made.

What can stop the investment is the process in between.

Now, that could be changing.

And the signal is coming from the regulator that oversees India’s securities market.

What is SEBI proposing?

The Securities and Exchange Board of India (SEBI), in a consultation paper released on August 14, has proposed changes to make KYC easier for people living outside India.

Under the current digital onboarding process, intermediaries face difficulties because they have to capture the investor’s location within India.

SEBI wants to address this problem.

If the proposal becomes a rule, eligible NRIs, Overseas Citizens of India (OCIs) and certain foreign nationals could complete their KYC digitally from the country where they live.

In simple terms, an investor living abroad may no longer have to travel to India just to complete account-opening formalities.

That could remove one of the biggest practical hurdles for overseas investors.

What has been the problem?

The problem is not necessarily the investment decision.

It is onboarding.

For an investor living abroad, opening an investment account can involve documents, verification, forms and repeated communication with intermediaries.

For someone sitting thousands of kilometres away, even a small delay can make the process frustrating.

Sharad Chand, Business Head – Wealth Management at Alankit Limited, pointed to this very issue.

For an overseas investor, deciding whether to invest in India may be easy. The difficult part has often been the account opening, KYC, documentation and verification process.

That gap matters.

Because an investor can lose interest not because India is unattractive, but because entering the market takes too much effort.

What could change?

This is where SEBI’s proposal becomes important.

Eligible overseas investors could be allowed to complete their KYC from their country of residence.

That means their physical location would become less of a barrier to opening an investment account in India.

The benefit would not be limited to less paperwork.

It could also make the process faster.

Today, people are used to completing many financial services online within a day or two. A process that takes weeks can feel outdated by comparison.

If KYC becomes simpler and more digital, some of that friction could disappear.

Why does NRI money matter to India?

There is a bigger story behind this.

Money coming from Indians living abroad is not just money sent home to support families. These foreign-currency inflows also matter to India’s wider economy.

They support the country’s external finances and help strengthen its position when it faces pressure from imports, the current account and the rupee.

India received strong remittance inflows in FY25, helping support its current account position.

But there is another opportunity.

An NRI who sends money to India can use it for family expenses, buy a home or keep it in a bank deposit.

But if part of that money goes into Indian stocks, mutual funds or other financial assets, it becomes investment capital for India’s financial markets.

That is where remittances can become something bigger than money sent home.

They can become long-term capital.

Why did Nithin Kamath welcome the move?

The proposal has also received support from the investment industry.

Zerodha founder and CEO Nithin Kamath said that making NRI onboarding easier could help bring more NRI money into Indian markets.

His point highlights a simple reality.

India does not always need to find new investors.

Sometimes, it needs to make it easier for existing investors to enter the market.

There are millions of Indians living and working abroad who already understand India, have financial links with the country and may want exposure to its growing economy.

The challenge is making that connection easier.

The bigger change

SEBI’s proposal is still at the consultation stage. It is not a final rule yet.

So it does not mean that every NRI can immediately start investing through a new KYC system.

But the direction is important.

For an investor living abroad, the question should increasingly be whether the person is eligible and properly verified — not simply where that person happens to be sitting.

That is a small change in process, but it could have a larger effect.

A person in Dubai should not have to think about a flight to India before making an investment decision.

Someone in London should not have to worry about sending documents across borders for a process that can potentially be completed online.

And an Indian living in America should be able to look at the Indian market on his phone and think about the investment itself — rather than the paperwork standing between him and it.

That is the larger idea behind SEBI’s proposal.

It is not simply about making KYC easier.

It is about making the financial distance between India and its global Indian community a little smaller.