Under the updated know-your-customer (KYC) regulations, if your KYC status is pending from April onwards, you will be ineligible to initiate new transactions as an investor.
KYC compliance is crucial for financial institutions to put a check on money laundering and other financial crimes
Under the updated know-your-customer (KYC) regulations, if your KYC status is pending from April onwards, you will be ineligible to initiate new transactions as an investor.
This restriction applies to all investments, including stock broking, mutual fund accounts, and derivatives. For instance, if an investor holds an active position in derivatives, they will be unable to close or square off that position due to their pending KYC status. No buying or selling transactions can be executed until the KYC verification is completed. Consequently, any open positions will be automatically closed on the expiry date regardless of their financial outcome.
Says Renu Maheshwari, CEO of Finzscholarz Wealth Manager: “According to the new rules, investors with verified or registered KYC status can freely transact with their current mutual funds and brokers without any limitations. However, if their KYC lacks the necessary validation, it will be considered incomplete. Hence, when these investors engage in transactions with a new broker or Asset Management Company (AMC), they must complete the validation process. Once this process is finalised, future transactions will not require additional validation, making the KYC fully transferable.”
KYC processes are significant for confirming customers’ identities and evaluating risks in financial transactions. Typically, traditional KYC involves separate verification steps carried out by individual financial institutions. On the contrary, unified KYC comes with a unified approach, and simplifies the verification process across multiple institutions.
Earlier, CDSL Ventures state in a circular on March 28, 2024: “The Securities and Exchange Board of India (Sebi) had extended the deadline from December 31, 2023, to March 31, 2024, for updating existing KYC records and indicated that failure to update KYC records by March 31, 2024, would result in such records being treated as invalid, and investors will not be allowed to transact in the securities market.”
Here are the steps for offline KYC verification.
Download the KYC form
Fill in the form with your details, especially your Aadhaar, or Permanent Account Number (PAN).
Visit the nearest KYC registration agency (KRA).
Submit the form with the attached ID and address proof.
Complete biometrics if required.
Collect the application number and track your application status online.
It requires up to seven days for the verification to get complete.
Here are the steps for online KYC verification.
Visit the official KRA website (KYC registration agency).
Follow the same KYC online steps as mentioned earlier.
Choose the biometric authentication online option.
Wait for an authorised representative to visit your address mentioned in the form.
Show original documents as requested and wait for the approval of your KYC.
KYC online verification can be done in less than 24 hours.