RBI Simplifies KYC Compliance for Foreign Portfolio Investors

The Reserve Bank of India (RBI) has eased compliance requirements for foreign portfolio investors (FPIs), allowing Indian banks to accept original certified copies of specified KYC documents that have been authenticated by recognised authorities overseas.

The change was introduced through the RBI (Commercial Banks–Know Your Customer) Amendment Directions, 2026, and has come into effect immediately.

The facility, which was earlier available to non-resident Indians and persons of Indian origin, has now been extended to FPIs, making it easier for overseas investors to complete document certification requirements.

Under the amended framework, Indian banks can accept original certified copies of specified KYC documents where the certification has been carried out by authorities recognised under RBI regulations.

These include authorised officials of overseas branches of Scheduled Commercial Banks registered in India, branches of overseas banks that have a relationship with Indian banks, a Notary Public abroad, a Court Magistrate, a Judge, or an Indian Embassy or Consulate General in the country where the non-resident customer resides.

As a result, FPIs based overseas will not need to arrange for their KYC documents to be certified through a process in India. Instead, they can use one of the recognised overseas certification channels and submit the original certified copies to their Indian bank.

The amendment, however, does not remove the requirement for banks to carry out the prescribed KYC checks on FPIs.

The RBI has also retained the existing definition of a certified copy. Where offline verification of Aadhaar cannot be carried out, the bank must compare the copy of the proof of possession of Aadhaar, or another officially valid document submitted by the customer, with the original.

An authorised bank official is required to record the verification and comparison on the copy in accordance with the applicable provisions.

The regulatory change comes amid continued movement in foreign portfolio flows into Indian markets. FPI outflows through exchanges stood at Rs 23,676 crore during the month till Friday, according to the data cited in the report.

Market flows are also being influenced by global factors, including developments in the Iran-US conflict, crude oil prices and US bond yields.

While elevated crude prices and higher US Treasury yields can weigh on Indian equities and foreign investment flows, the resilience of the Indian economy and expectations of improved corporate earnings could provide countervailing support, the report said.