SEBI will roll out digital KYC process for NRIs, faster FPI registration, and predictive market monitoring

In a significant step towards deepening foreign participation in Indian capital markets, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey announced that the regulator is prioritizing simplification of Know Your Customer (KYC) procedures for non-resident Indians (NRIs) to enable remote onboarding.

Speaking at an event organized by the Bombay Stock Exchange Brokers Forum on October 11, Pandey said SEBI’s immediate goal is to ensure that non-resident Indians do not need to travel to India to complete their know-your-customer (KYC) requirements.

“We have not yet been able to create easy and secure KYC access for NRIs to facilitate their participation in the stock market. This will be an urgent goal for us,” Pandey said.

Remote KYC for global Indian investors

SEBI is currently in discussions with the Reserve Bank of India (RBI) and the Unique Identification Authority of India (UIDAI) to build a framework that will allow NRIs to complete the KYC verification process remotely. With over 3.5 lakh Indian rupees living abroad and $135 billion worth of remittances flowing into the country in FY25, SEBI believes facilitating market access for diaspora can unlock significant investment potential.

The move comes amid the recent slowdown in retail investor activity, marked by a decline in Systematic Investment Plan (SIP) inflows.

Push for faster FPI registration

Pandey also announced measures to simplify the registration process for foreign portfolio investors (FPIs) through a single-window digital portal.

“We are already consulting with stakeholders to implement it… We would like to be among the best in the world in terms of facilitating registration,” he said, adding that the process should be “fast, efficient and secure.”

He explained that these are largely “practical problems” and do not involve significant risks. SEBI is working with RBI and Income Tax Department to digitize FPI registration and compliance systems.

Cybersecurity and market resilience

The SEBI Chairman emphasized the ongoing reforms to enhance cybersecurity and resilience of market infrastructure. The regulator is introducing new “air gap” security guidelines in collaboration with Market Infrastructure Institutions (MIIs) and has launched live disaster recovery exercises and redundancy models for clearing firms.

“MIIs are stress-tested through live disaster recovery exercises,” Pandey said.

Predictive monitoring and algorithmic supervision

On market supervision, Pandey said SEBI is moving towards predictive monitoring using advanced data analytics to detect fraud and market manipulation.

“We are developing role-based alerts to identify pump-and-dump patterns and fraudulent trades in wholesale trades,” he noted, referring to the growing role of high-frequency algorithmic trading in India’s markets.

Pandey also highlighted SEBI’s efforts to review the Stock Lending and Borrowing Mechanism (SLBM) to ensure better risk management, while promising a consultative approach to policies governing short-term derivatives.

He urged stakeholders to drive innovation in capital markets, noting that diversity in financial instruments is key to resilience. Regarding Chhota SIPs, he acknowledged the slow progress but emphasized the steps needed to unleash their potential. Pandey also said that SEBI is addressing tax, delivery and GST challenges in the commodity derivatives sector to stimulate growth.

“These reforms reflect SEBI’s commitment to creating a fair, transparent and resilient market,” Pandey concluded.