RBI Eases KYC Rules for Foreign Portfolio Investors to Allow Overseas-Certified Documents — September 21, 2026

In a regulatory reform designed to ease cross-border capital inflows, the Reserve Bank of India (RBI) has amended its Know Your Customer (KYC) framework to permit banks to accept overseas-certified documentation for Foreign Portfolio Investors (FPIs). The decision, which took effect on September 18, 2026, extends a compliance accommodation previously restricted to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).

Under standard KYC procedures governed by the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, and the Banking Regulation Act, 1949, regulated entities in India are required to compare copies of identity paperwork or officially valid documents against physical originals and record a domestic verification note on each file. For institutional foreign funds based across global financial hubs, this requirement often triggered logistical delays, prolonged custodial verifications, and increased administrative costs.

Approved Overseas Certification Entities

Under the revised framework, the central bank has modified the definition of an eligible "Certified Copy" to allow scheduled commercial banks, small finance banks, local area banks, regional rural banks, and co-operative banks to accept original certified copies validated by designated overseas officials.

Eligible Overseas Certifying Authorities:

• Authorised officials of overseas branches of Scheduled Commercial Banks registered in India
• Branches of overseas banks maintaining established correspondent relationships with Indian banks
• A Notary Public operating in the investor's country of jurisdiction
• A Court Magistrate or a Judge abroad
• Authorised diplomats and officials of an Indian Embassy or Consulate General where the overseas investor resides

Institutional and Market Impact

Foreign portfolio flows represent a foundational pillar of liquidity in the Indian stock and bond markets. In recent years, market participants and global custodial institutions have highlighted friction points in the verification pipeline when executing transactions or opening dedicated accounts under SEBI's Portfolio Investment Scheme.

By aligning document authentication requirements across all bank tiers—including commercial and regional cooperative institutions—the RBI's revised directions eliminate redundant physical handling while preserving core Anti-Money Laundering (AML) standards. Financial intermediaries and overseas asset management firms can now rely on local notaries or Indian overseas bank branches, substantially shortening onboarding turnaround cycles for funds deploying capital into Indian indices, corporate debt, and sovereign bonds.

Tags: Reserve Bank of India Foreign Portfolio Investors Banking SEBI Indian Financial Markets