RBI Eases KYC Rules For FPIs, Overseas Certification Now Allowed

New Delhi: The Reserve Bank of India has simplified Know Your Customer compliance for foreign portfolio investors by permitting Indian banks to accept original certified copies of specified documents verified by authorised officials overseas.

The relaxation, introduced through the RBI (Commercial Banks–Know Your Customer) Amendment Directions, 2026, took effect immediately. It extends to FPIs a facility already available to non-resident Indians and persons of Indian origin.

Overseas Authorities Can Certify

Under the revised framework, FPIs operating from overseas jurisdictions will no longer need to get relevant KYC documents certified through a process in India.

Banks can accept original certified copies verified by officials of overseas branches of Indian scheduled commercial banks. Officials at branches of foreign banks having relationships with Indian banks can also certify the documents.

Other recognised authorities include a Notary Public abroad, Court Magistrate, Judge, Indian Embassy or Consulate General in the country where the investor resides.

The measure is expected to reduce procedural delays and make account-related compliance easier for foreign investors participating in Indian financial markets.

KYC Checks Remain Mandatory

The amendment does not dilute banks’ responsibility to conduct KYC verification before onboarding FPIs or providing banking services.

The RBI has also retained its existing definition of a certified copy. Banks must compare the submitted copy with the original officially valid document produced by the customer.

Where offline Aadhaar verification cannot be conducted, the bank must compare the proof of possession of Aadhaar with the original. An authorised bank officer must record the verification on the document copy.

FPI Selling Continues

The relaxation comes as foreign investors remain cautious about Indian equities. FPIs sold shares worth Rs 23,676 crore through exchanges this month up to Friday, reversing the positive investment trend recorded during July and August.

Foreign flows are likely to be influenced by the Iran-US conflict, crude oil prices and elevated American bond yields. The US 10-year yield at around 5 per cent remains a key concern.

However, India’s resilient economy and expectations of stronger corporate earnings could offer support to foreign investment sentiment.