India’s securities regulator, the Securities and Exchange Board of India (Sebi), has announced a relaxation in the Know Your Customer (KYC) requirements for mutual fund investors, including non-resident Indians (NRIs), in response to consumer feedback.

According to a communication seen by Mint, Sebi has provided NRIs with a one-year extension to complete their KYC requirements. This decision follows numerous representations from NRIs highlighting the challenges they face in passport validation.

In a significant change, Sebi has also adjusted the KYC process for all mutual fund investors. Investors can now choose to validate their identity through either email or mobile verification, rather than being required to complete both. Additionally, investors who have not yet completed the KYC process will be allowed to redeem their investments, subject to intermediary due diligence.

Viral Bhatt, a mutual fund distributor and founder of Money Mantra, commented on the development, stating, “We will have to wait for clear instructions from the KYC Registration Agencies (KRAs).”

Previously, mutual fund investors were required to verify both their phone number and email with the KRAs by April 1, failing which their KYC status would be marked as “on hold.” Investors were also required to use their Aadhaar card for KYC updates to achieve a “validated” status, allowing them to freely transact with new Asset Management Companies (AMCs). Accounts verified with other officially valid documents but not Aadhaar were tagged as “verified,” permitting the sale of existing investments but imposing restrictions on purchasing new schemes from different AMCs. This necessitated redoing the KYC process or updating it with Aadhaar for each new investment.

The recent changes address the concerns of NRIs, who often lack Aadhaar cards and find the KYC process burdensome, especially given its unavailability online.