RBI KYC Amendment 2026: NRI FPI Document Rules Updated

What Happened?

On September 18, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Local Area Banks – Know Your Customer) Amendment Directions, 2026 (RBI/2026-27/259). This amendment modifies the existing KYC Directions dated November 28, 2025, and introduces significant relief for overseas customers—specifically Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), and Foreign Portfolio Investors (FPIs).

The key change: Banks can now accept certified copies of documents from overseas authorities instead of requiring customers to produce documents certified by Indian bank officials only. This means NRIs, PIOs, and FPIs can get their identity and address documents certified by overseas notaries, embassies, or other recognised authorities, making the KYC process simpler and faster.

Background & Legal Context

The KYC (Know Your Customer) framework is governed by India's Prevention of Money Laundering Act, 2002 and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. These laws require all financial institutions—including banks—to verify the identity and address of customers before opening accounts or conducting transactions.

Under the Banking Regulation Act, 1949 and Payment and Settlement Systems Act, 2007, the RBI has authority to issue directions to banks on KYC procedures. The original KYC Directions (November 2025) required banks to compare original documents with copies and certify them through an authorised bank officer.

However, this created a practical challenge for overseas customers:

• NRIs living abroad could not easily access Indian bank officials to certify their documents
• FPIs investing in Indian securities faced delays in account opening
• PIOs (Persons of Indian Origin with OCI status) also faced similar bottlenecks

The Foreign Exchange Management (Deposit) Regulations, 2016 (FEMA 5(R)) defines NRIs and PIOs. The RBI, recognising the operational challenges, decided to extend alternative certification options to these categories of overseas customers—a practice already in place for NRIs and PIOs, now extended to FPIs.

This amendment falls under RBI's regulatory authority under Section 35A of the Banking Regulation Act, 1949, and Section 11(1) of the Foreign Exchange Management Act, 1999, which grant RBI powers to issue directions in the public interest.

What Does This Mean for You?

For Non-Resident Indians (NRIs):

If you are an NRI opening a savings account, current account, or deposit account with a Local Area Bank in India, you now have flexibility in document certification. Instead of waiting for a certified copy from an Indian bank official, you can:

• Get your passport or identity document certified by a Notary Public in your country of residence
• Obtain certification from a Court Magistrate or Judge abroad
• Request certification from the Indian Embassy or Consulate General in your country
• Use an authorised official of overseas branches of Scheduled Commercial Banks registered in India
• Approach branches of overseas banks that have relationships with Indian banks

For Persons of Indian Origin (PIOs):

Similar benefits apply if you hold OCI (Overseas Citizen of India) status and wish to open bank accounts in India for remittances, investments, or business purposes.

For Foreign Portfolio Investors (FPIs):

This is a major relief for FPIs. Foreign institutional investors and foreign companies investing in Indian stock markets can now:

• Open demat accounts and trading accounts more quickly
• Complete KYC verification without requiring documents certified by Indian bank officials
• Use overseas notaries or embassies for document certification, reducing compliance time
• Facilitate faster capital inflows into Indian securities markets

For Local Area Banks:

Banks offering these accounts now have a clearer, more flexible framework. They can:

• Accept certified copies from the six categories of overseas authorities mentioned
• Reduce document turnaround time for overseas customers
• Expand their customer base among NRIs, PIOs, and FPIs without operational delays

Tax Compliance Angle:

While this is primarily a banking/KYC amendment, it has indirect income tax relevance:

• NRIs opening accounts: Must comply with Income Tax Act 2025 provisions on reporting foreign income, tax residency, and TDS applicability on interest earned in India
• FPIs investing: Subject to TCS (Tax Collected at Source) under Section 194LA (on sale of immovable property) and other applicable tax rules
• Faster KYC = faster account activation = better compliance: Quicker account opening enables NRIs and FPIs to properly declare income sources to Indian tax authorities

What Should You Do Now?

If You Are an NRI or PIO:

Step 1: When opening a Local Area Bank account in India, inform the bank that you wish to provide documents certified overseas. The bank will accept documents certified by:

• Notaries in your country of residence
• Local court or magistrate officials
• Indian Embassy/Consulate where you reside
• Authorised officials of overseas branches of Indian banks

Step 2: Obtain certified copies of your passport, visa (if required), and address proof in your country. Ensure the certifying official is one of the recognised categories.

Step 3: Submit these certified documents to the Local Area Bank along with your application. The bank officer will complete the comparison and KYC process.

Step 4: Inform your CA or tax advisor about the new account to ensure proper reporting under income tax return (ITR) for AY 2026-27 onwards.

If You Are an FPI:

Step 1: Coordinate with your depository participant (DP) or broker about activating the simplified KYC process using overseas-certified documents.

Step 2: Get your company/entity registration documents and beneficial ownership documents certified by a Notary Public, local court, or Indian embassy in your jurisdiction.

Step 3: Submit to the Local Area Bank or DP for demat account activation.

Step 4: Ensure TCS, TDS, and Form 15CA/15CB filings are updated for tax compliance.

For All Overseas Customers:

• Timing: This amendment is effective immediately (September 18, 2026). Start the KYC process now if you planned to open accounts.
• Documentation: Keep certified copies of documents for your records and future tax audits.
• Tax reporting: Even with simplified KYC, income earned in India must be reported in your ITR. Consult a CA before opening accounts.
• Foreign tax residency: NRIs must verify their tax residency status in India under the Income Tax Act 2025. Simplified KYC does not change tax obligations.

Key Takeaways

• RBI Amendment (Sept 2026): NRIs, PIOs, and FPIs can now get bank documents certified by overseas notaries, embassies, courts, or authorised officials of overseas banks instead of only Indian bank officials.
• Faster Account Opening: This removes the bottleneck of sending documents to India for certification, making the KYC process quicker for overseas customers.
• Six Recognised Categories: Notary Public, Court Magistrate, Judge, Indian Embassy/Consulate, overseas branches of Indian Scheduled Commercial Banks, or overseas bank branches with Indian relationships.
• Tax Compliance Remains Mandatory: While KYC is simplified, NRIs and FPIs must still comply with Income Tax Act 2025, TDS/TCS rules, and ITR filing requirements for income earned in India.
• Effective Immediately: The amendment came into force on September 18, 2026. All Local Area Banks must implement these provisions without delay.

Bottom Line: This RBI amendment is customer-friendly for overseas investors and NRIs but does not reduce income tax or GST obligations in India. If you are opening an account under these new norms, ensure parallel compliance with your tax residency status and income reporting requirements under the Income Tax Act 2025.

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