Capital markets regulator Sebi on Wednesday proposed that KYC and account opening process ought to be separated so as to standardise the process and keep away from duplication.
It has been prompt that KYC ought to be performed via stock exchanges, depositories and KYC Registration Agencies(KRAs), and documentation for opening of account for coming into into transaction would proceed to be the accountability of involved registered intermediaries.
At current, KYC of shoppers within the securities market is performed by registered intermediaries — stock brokers, depository individuals, RTAs — and then Registered Intermediaries (RIs) add KYC data within the KRA system.
The position of KRAs is centralisation of the KYC data, ascertaining the add of KYC paperwork and sharing KYC data with Sebi registered intermediaries as and when required, Sebi famous within the session paper.
The accountability of conducting the KYC and upkeep of data rests with the RIs and KRAs is barely a repository of KYC data.
In the prevailing KYC process, each RI has to spend money on infrastructure, manpower, expertise, and implement processes which frequently fluctuate between intermediaries.
Also, within the eventuality of cancellation of registration of RI, unique KYC paperwork collected by it might not be obtainable to subsequent RI and investor has to endure KYC process once more.
The proposed process would assist in attaining a number of goals of standardising the KYC process, making the KYC process extra strong, avoiding duplication, saving value to RI amongst others, Sebi stated.
The Securities and Exchange Board of India (Sebi) has sought feedback from public until February 15 on the proposal.
With regard to shoppers of mutual funds, within the proposed system, the Registrar to an Issue and Share Transfer Agent (RTA) appointed by the mutual fund ought to carry out the KYC of the shoppers of mutual funds via the system of KRA as front-end or else may search registration as KRA from the regulator.
Since the KRAs ought to be liable for KYC of the consumer’s and they need to proceed to be the repository of KYC information, the prevailing KYC data of shoppers submitted by RIs ought to be re-verified by KRAs and KRAs ought to make sure the correctness of the KYC data maintained by it, Sebi stated.
“KRA shall ensure correctness of all KYC records maintained by it by December 2021 after due verification,” it added.
The value of conducting KYC by KRA ought to cheap and mustn’t cast extra burden on investor.
With regard to authentication of present data of shoppers with KRA, Sebi stated such verification value ought to be borne by KRA or KRA could also be funded (one time) for such verification value by Investor Protection Fund (IPF) of Sebi, stock exchanges and depositories.
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