Consultation Paper: SEBI Proposes Major Simplification of KYC On-boarding and Risk Management at KRAs
Securities and Exchange Board of India (SEBI) has issued a Consultation Paper dated January 16, 2026, proposing significant reforms to the client on-boarding process and risk management framework at KYC Registration Agencies (KRAs). The proposals aim to ease investor on-boarding, reduce duplication of KYC processes, and strengthen data quality and risk controls across intermediaries in the securities market.
Public comments on the consultation paper are invited up to February 6, 2026.
Background
SEBI’s existing KYC framework is governed by the KYC Master Circular dated October 12, 2023, aligned with the Prevention of Money Laundering Act, 2002 (PMLA) and the PML Rules, 2005.
Based on feedback from market participants and recommendations of a working group comprising intermediaries, market infrastructure institutions, and KRAs, SEBI identified the need to:
Reduce repetitive KYC submissions by clients
Improve portability of KYC data across intermediaries
Ensure periodic updating of KYC records
Rationalise validation requirements at KRAs
Key Proposals in the Consultation Paper
1. Centralisation of Supplementary KYC Information at KRAs
SEBI proposes that certain supplementary information currently collected repeatedly by intermediaries be centrally stored at the KRA level and made portable.
Proposed data to be uploaded and shared through KRAs includes:
Income range
Net worth (optional)
Occupation
Place and country of birth
FATCA-related information
Politically Exposed Person (PEP) status
CKYC ID (if available)
DIGIPIN (if available)
Expiry date of Officially Valid Documents (OVDs)
Impact:
Clients will not be required to submit the same information each time they approach a new intermediary, significantly easing on-boarding.
2. Five-Year Mandatory Re-KYC Framework
To address outdated KYC records, SEBI proposes that:
All KYC records must be reviewed at least once every five years
KRAs must send alerts to intermediaries if:
KYC has not been updated in five years
OVD validity has expired
A minor client has attained majority
KRAs may also downgrade KYC portability if updates are not completed within prescribed timelines.
Impact:
This introduces a structured and time-bound approach to ongoing KYC compliance and risk monitoring.
3. Automatic Sharing of KYC Updates Across Intermediaries
Once a KYC update is carried out through any intermediary:
The updated information shall be disseminated by the KRA to all other intermediaries dealing with the same client.
Impact:
Eliminates duplication of compliance efforts and improves investor experience.
4. Simplification of KYC Validation for Current Address
SEBI proposes that:
Source verification of current address will not be mandatory for tagging a KYC record as “Validated”, provided the permanent address has already been source-verified.
Impact:
This change is expected to reduce delays in account opening, especially where non-Aadhaar address proofs are used.
5. Alternate Contact Details and Easier Mobile Verification
Clients may now provide:
An alternate mobile number and email ID (optional)
Where a mobile number is Aadhaar-seeded and validated:
Intermediaries accessing KYC data from KRAs need not re-verify the mobile number.
Impact:
Reduces OTP-based friction and improves digital on-boarding success rates.
6. Mandatory Delinking of KYC Records Upon Account Closure
SEBI proposes a formal mechanism for delinking KYC records:
Intermediary to inform KRA within 3 working days of account closure
KRA to update or delink the record within 2 working days
Impact:
Strengthens data privacy and prevents unnecessary sharing of client information.
7. Relaxation for OCI Card Holders Residing in India
For Overseas Citizens of India (OCI) residing in India:
Submission of overseas address proof will be optional, provided proof of residence in India for more than 182 days is furnished.
8. Simplified Documentation for Name Change
Where a client has already updated their name in:
PAN and Aadhaar databases
Submission of additional documents such as marriage certificate or gazette notification will be optional.
Applicability and Transition
Once notified:
New provisions will apply immediately to new KYC records
Intermediaries will be given 3–6 months to update existing records, depending on the nature of the requirement
KRAs are expected to support intermediaries during the transition.
Conclusion
SEBI’s proposals mark a significant step towards a more centralised, digital, and investor-friendly KYC ecosystem, while maintaining robust AML and risk management standards.
For intermediaries including AIFs, PMS providers, brokers, and fintech platforms, these changes will require:
System upgrades
Enhanced KYC monitoring workflows
Better coordination with KRAs
However, the long-term benefits in terms of efficiency, compliance quality, and client experience are substantial.