RBI KYC Amendment 2026: FPI Documentation Rules Updated

What Happened?

On September 18, 2026, the Reserve Bank of India (RBI) issued the Rural Co-operative Banks – Know Your Customer (KYC) Amendment Directions, 2026. This amendment modifies the existing KYC framework originally issued on November 28, 2025. The key change: Foreign Portfolio Investors (FPIs) can now obtain certified copies of identity documents through overseas authorities, bringing them at par with Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).

Previously, only NRIs and PIOs had the facility to get documents certified by Indian embassies, notary publics abroad, or authorised officials of overseas bank branches. Now, FPIs enjoy the same flexibility when opening accounts or conducting KYC verification with rural co-operative banks in India.

Background & Legal Context

This amendment is issued under multiple legal provisions:

• Banking Regulation Act, 1949 – Sections 35A and 56
• Payment and Settlement Systems Act, 2007 – Sections 10(2) and 18
• Foreign Exchange Management Act (FEMA), 1999 – Section 11(1)
• Prevention of Money Laundering Act (PMLA), 2002 – Compliance requirement
• Prevention of Money Laundering (Maintenance of Records) Rules, 2005 – Rule 9(14)

While this is not directly an Income Tax Act 2025 matter, it has indirect relevance. When NRIs, PIOs, or FPIs file Income Tax returns or claim tax benefits in India, they must complete proper KYC verification with their banks. The simplified certification process now applies across rural co-operative banks, making it easier for such investors to maintain compliant banking relationships and supporting documentation for tax purposes.

For Assessment Year 2026-27 (Financial Year 2025-26), any foreign investor or FPI subject to Indian income tax must maintain proper bank records and KYC compliance. This amendment streamlines that process.

What Does This Mean for You?

For Foreign Portfolio Investors (FPIs)

If you invest in Indian securities through portfolio routes, you can now open or maintain accounts with rural co-operative banks more easily. Instead of waiting for original certified documents from India, you can obtain certification from:

• Notary Public in your home country
• Local Court Magistrate or Judge
• Indian Embassy or Consulate General in your country
• Authorised officials of overseas branches of Indian Scheduled Commercial Banks
• Branches of foreign banks having relationships with Indian banks

This means faster account opening, reduced postal delays, and simplified verification.

For NRIs and PIOs

You continue to benefit from this facility. The amendment confirms and standardises the process, removing any ambiguity about which rural co-operative banks must accept overseas-certified documents.

For Rural Co-operative Banks

These banks must now accept certified copies from FPIs obtained through the approved overseas authorities. They cannot demand original documents or insist on domestic certification for FPIs. This applies with immediate effect from September 18, 2026.

For Indian Tax Compliance

From a tax standpoint, this benefits foreign investors who must:

• File Form 49AA (for NRIs) or other relevant forms
• Maintain bank account records for tax return filing under Income Tax Act 2025
• Demonstrate source of funds and income flows
• Comply with Schedule FA (Foreign Assets) disclosure if applicable

Simplified KYC means these compliance documents are ready faster, helping investors avoid penalties for incomplete disclosures in their ITRs.

What Should You Do Now?

If You Are an FPI or Foreign Investor

1. Check Your Current Bank: Verify if your bank is a rural co-operative bank. If yes, you can now use the simplified certification process for KYC updates or account modifications.
2. Gather Certified Documents: If opening a new account, obtain certified copies from any of the six approved authorities abroad. You no longer need to courier original documents to India.
3. Submit to Bank: Present these certified copies directly to the bank. They must accept them under the new amendment.
4. Keep Records: Maintain copies of all certified documents for your tax records. You may need these when filing income tax returns showing foreign source income or FPI investments.

If You Are an NRI/PIO

1. No Action Required: Your existing rights remain unchanged. Continue using your approved certification channels.
2. Flexibility: If changing banks to a rural co-operative bank, you now have a clearer process.
3. Tax Compliance: Ensure all bank account details are updated in Form 49AA or your ITR to reflect any account changes.

If You Run a Rural Co-operative Bank

1. Update Internal Procedures: Modify your KYC policy to reflect acceptance of overseas-certified documents for FPIs, not just NRIs/PIOs.
2. Train Staff: Ensure your employees understand which overseas authorities' certifications are acceptable.
3. Update Customer Communications: Inform existing and prospective FPI customers about this facility.
4. Compliance Check: Ensure all FPI accounts opened after September 18, 2026, follow the new procedure.

If You Are an IFA or Tax Professional

1. Advise Clients: Inform FPI clients and foreign investors about this simplified process.
2. Documentation Review: When preparing ITRs for FPIs in AY 2026-27, note that bank KYC documents can now be obtained faster.
3. Compliance Checklist: Add this amendment to your foreign investor compliance checklist.

Key Takeaways

• FPIs Now Equal: Foreign Portfolio Investors now have the same KYC certification privileges as NRIs and PIOs when dealing with rural co-operative banks in India.
• Six Approved Overseas Authorities: Document certification can be obtained from notary publics, judges, magistrates, Indian embassies/consulates, or authorised officials of Indian/foreign banks abroad.
• Effective Immediately: The amendment took effect on September 18, 2026, and all rural co-operative banks must comply without delay.
• Indirect Tax Benefit: While primarily a regulatory change, it streamlines KYC for foreign investors subject to Indian income tax and simplifies ITR filing processes for FY 2025-26 (AY 2026-27).
• No Changes for NRIs/PIOs: Existing facilities for Non-Resident Indians and Persons of Indian Origin remain unchanged; this amendment extends similar benefits to FPIs.

Bottom Line: If you are a foreign investor, FPI, NRI, or PIO banking with rural co-operative banks, this amendment reduces paperwork, speeds up account opening, and simplifies compliance. Ensure your bank is aware of these updated guidelines. For tax filing purposes in AY 2026-27, maintain all certified KYC documents as these form part of your supporting records for income tax returns.

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