NRI investing in India? Don’t get KYC wrong

Investing in India as a non-resident Indian (NRI) involves more than just opening an account and transferring funds. The process requires careful attention to the Know Your Customer (KYC) requirements, which include establishing identity, overseas address, tax residency, and NRI status. To meet these requirements, NRIs typically need documents such as a PAN, passport, overseas address proof, proof of NRI status (like a visa or residence permit), a Foreign Account Tax Compliance Act (FATCA) or Common Reporting Standard (CRS) declaration, and details of their NRE/NRO bank accounts.

For some NRIs, an Overseas Citizen of India (OCI) card may also be necessary. Overseas address proof can be a utility bill, bank statement, or residence permit, all usually dated within the last three months. Additionally, NRIs investing in listed equities may need to submit a PIS letter from their designated bank, although the specific documents required can vary between institutions.

Completing KYC online is possible for many NRIs, but the level of digital onboarding depends on the individual's existing KYC status, the intermediary they are working with, and the verification requirements set by those entities. NRIs whose KYC has already been registered with the KYC Registration Agency can complete the process entirely online, while others may need to undergo some steps digitally.

The critical step of document attestation, which verifies the authenticity of submitted documents, can often be completed through e-notarisation. However, wet-ink signatures on application forms can still be a hurdle for new or first-time investors. The Securities and Exchange Board of India (SEBI) has proposed changes that could facilitate fully online onboarding for eligible overseas investors.

The KYC process for NRIs generally involves four steps: submitting KYC information online, uploading identity and address documents, verifying these documents, and having the KYC status verified and recorded with the appropriate Know Your Customer Registry. While much of this process can be digitized, sometimes physical presence may be required.

It's important for NRIs to understand that while most of the documents needed for KYC are similar to those for resident investors, additional information and documents are required to establish their overseas residency and tax status. Common mistakes that can delay the KYC process include mismatches in document details, issues with the overseas address, incorrect verification or attestation, and incomplete FATCA/CRS information related to foreign tax residency and tax identification numbers.