The Securities and Exchange Board of India (“SEBI”) by a Press Release dated 14th January, 2021 has released a consultation paper on Role of KYC Registration Agencies (“KRAs”) / Market Infrastructure Institutions (“MIIs”) in performing KYC (Know Your Client) of clients in securities market.
SEBI has invited comments / views from various stakeholders including market intermediaries and the public on the proposed role of KRAs/MIIs (Stock Exchanges and Depositories) in performing KYC of the clients in Securities Market. Comments may be sent by e-mail or through post. While sending comments through e-mail, the subject “Role KRAs in performing KYC” needs to be mentioned and it may be emailed to Shri Narendra Rawat, General Manager at narendrar@sebi.gov.in and Ms. Sushma Upadhyayula, Assistant Manager at sushmau@sebi.gov.in or send by post at the following address latest by February 15, 2021.
Mr. Narendra Rawat General Manager Market Intermediaries Regulation and Supervision Department SEBI Bhavan II, Plot No.C-7, G Block Bandra Kurla Complex, Bandra (East) Mumbai – 400 051.
Key highlights
- In order to achieve multiple objectives of standardizing the KYC process, making the KYC process more robust, avoiding duplication, saving cost to RI etc., a modified process for KYC in securities market has been introduced.
- It has been proposed that the KYC and account opening process may be separated by doing client KYC through KRAs (which includes Market Infrastructure Institutions like Stock Exchanges, Depositories). This would ensure an end to end secured KYC process including Aadhaar authentication, independent verification of Officially Valid Document (OVD) / Income Tax Permanent Account Number (PAN), document safekeeping, technological innovations, standardization, cyber security norms, etc.
- KYC will be responsibility of RIs and KRAs, documentation for opening of account for entering into transaction shall continue to be the responsibility of concerned RI.
- The clients can complete the KYC either through physical mode or through the online system. For the purpose of KYC, client can approach KRA directly or through an RI. Client can complete the KYC directly on the system of KRA or could be facilitated by RIs as frontend for KRA. The details of the same are provided in the consultation paper.
- In the proposed system, the Registrar to an Issue and Share Transfer Agent appointed by the mutual fund shall perform the KYC of the clients of mutual funds through the system of KRA as frontend or else may also seek registration as KRA from SEBI.
- Since the KRAs will be responsible for KYC of the client’s and they will continue to be the repository of KYC data, the existing KYC records of clients submitted by RIs will be re-verified by KRAs and KRAs will ensure the correctness of the KYC records maintained by it. KRA will ensure correctness of all KYC records maintained by it by Dec 2021 after due verification.
For a detailed read on the consultation paper, please refer to this hyperlink.
Source : Securities and Exchange Board of India
