NRIs struggle with new mutual fund KYC rules: 3 reasons making MF investments difficult for them now

economictimes.indiatimes.com:

OCI investors to enter the market. Existing non-resident investors have also been affected. Due to this, many NRIs are losing out on the ability to capitalize on investment opportunities.

The new KYC norms, which came into effect on April 1, 2024, introduced stringent requirements, rendering certain documents such as bank statements or utility bills not considered valid documents for completing the KYC process. While the new rules aim to enhance security and compliance, they have inadvertently created investment barriers for NRIs.
As per the Aadhaar rules, NRIs and OCIs with foreign mobile numbers are exempted from the Aadhaar-linked OTP verification requirements, provided their PAN reflects their NRI status. Despite such an exemption, the new KYC norms of compulsory Aadhaar validation to get 'KYC Validation' status portray a different scenario and have created a conflict of regulations for the Indian diaspora.

Following are the issues that NRIs and OCIs are facing in making mutual fund investments due to the new KYC rules:

• Limited Aadhaar Integration: Although 25% of NRIs possess an Aadhaar number, only 7% have successfully linked it with an Indian mobile number. This poses a significant hurdle as Aadhaar authentication often requires OTP verification, which is contingent upon an active Indian mobile connection.
• Challenges with OTP Verification: A mere 3% of NRIs have receive OTPs on their Indian mobile numbers due to various issues such as number inactivity, carrier problems, or message delivery failures.