MUMBAI: A KYC (Know Your Customer) based on PAN or Aadhaar will no more be sufficient if you want to invest in mutual funds, stock and commodities markets.
Apart from the KYC data already provided under Sebi rules, all investors will now have to give mother’s name and proof of permanent address in case their local address or the address for correspondence is not the same as permanent address. Among other details, the new norms also seek disclosure of ‘maiden name’.
The requirement will become mandatory for new investors from August 1. Dates for existing investors have not been announced.
Sebi on Thursday issued the notification for the operationalisation of Central KYC Records Registry, based on a finance ministry Gazette notification of November 2015. The new requirement will also hit Sebi’s e-KYC programme which uses Aadhaar and One-Time Password (OTP) through mobile phones for authentication of individual investors, sources said. The regulator’s plans to start selling mutual funds through e-commerce portals may also get delayed by several months, they added. The operational aspect of Central KYC may also impact the ‘ease of doing business’ campaign, said brokers.
TOI spoke to several top officials from the stock broking and mutual fund industries for their views on the notification. They declined to go on record. They said the execution of the new norm looked flawed although a central KYC agency was mooted to ease the investment process, help speed up financial inclusion and spread the culture of savings and investment. For example, currently PAN is the sole identifier for an investor, but under the new rules there will not be any unique identifier. This may lead to confusion or duplication about an individual’s identity. About a decade ago, the failure of the de-duplication process had led to the IPO scam.
“There is utter confusion,” said the chief of a city-based broking house. “Associations of brokers are trying to get clarity from Sebi, exchanges as well as depositories about the operational aspects of the Central KYC notification.”