The Securities and Exchange Board of India (Sebi) has simplified the KYC process and rationalised the risk management framework at KYC registration agencies (KRAs) to facilitate the seamless onboarding of clients in the securities market.
Investors are not required to go through the KYC process again if they engage with a different intermediary in the securities market. The intermediary can retrieve the verified records from the KRA database.
The Securities and Exchange Board of India (Sebi) has simplified the KYC process and rationalised the risk management framework at KYC registration agencies (KRAs) to facilitate the seamless onboarding of clients in the securities market.
Sebi has asked the know your customer (KYC) registration agencies (KRAs) to verify customers’ KYC document attributes of all clients within 2 days of receipt of KYC records, starting September 1, aimed at seamless onboarding of clients in the securities market. “As a part of (the) risk management framework, the KRAs shall verify the following attributes of records of all clients within 2 days of receipt of KYC records,” says Sebi in the circular.
These measures have been taken to smoothen the investment journey for investors. “For the interest of investors and for ease of transacting in the securities market, the client shall be allowed to open an account with intermediaries and transact in the securities market as soon as the KYC process is completed,” reads the circular.
The KYC process obtains the clients’ identity and address proof. Sebi said the permanent account number is mandatory (PAN) for all securities market participants.
Sebi has outlined a framework for KRAs to validate records. KRAs and intermediaries were instructed to integrate their systems to facilitate the seamless exchange of documents to enable verification of “attributes within the risk management framework”, Sebi said.
Sebi's Guidelines
As part of the risk management framework, KRAs are tasked with verifying clients’ documents within two days of receiving their KYC records, including PAN, PAN-Aadhaar linkage, and name and address. KRAs must also confirm the client's mobile number and email address.
In the case of PAN-exempt records, KRAs will verify the client’s name, address, mobile number, and email address. Only those client records validated by KRAs through official databases, such as the Income Tax Department’s PAN database and Aadhaar XML/Digilocker/M-Aadhaar, will be considered validated records. When this process is completed, clients need not undergo the KYC process again when dealing with different intermediaries in the securities market.
Those investors who have not submitted the Aadhar as part of KYC documents, KRAs are asked to verify them within 90 days. “The records of all existing clients whose KYC has been completed based on other valid documents (OVDs) other than Aadhaar shall be verified within a period of 90 days from September 01, 2023,” says Sebi.
Clients whose records cannot be verified will not be permitted to conduct further transactions in the securities market until the attributes are validated, Sebi said.