SEBI may take Aadhaar route to tap buyers on e-comm platforms

This will help in easy on-boarding of customers, says Nilekani panel

The Nandan Nilekani Committee set up by the securities market regulator has suggested that Aadhaar-based e-KYC be the enabler to achieve the objective of roping in 20 crore investors in the next few years, according to sources. At present, there are about 4.5 crore investors.

This would help in easy on-boarding of customers as Aadhaar already has an individual’s bank account number.

The committee was set up to outline the manner in which mutual fund schemes may be sold over e-commerce platforms such as Amazon and Flipkart.

Spot registration

To help in increasing the number of e-KYC registration for Aadhaar holders, the industry has mooted spot registration at investor meets, incentivising banks and micro-finance institutions to do e-KYC, and putting up stalls at post offices, among other things. The Committee has also suggested doing away with the investment cap of ₹50,000 per fund house per annum based on Aadhaar and make it ₹ 50,000 per transaction as the Aadhaar Bill has been passed in Parliament.

The objective of the regulator is to expand the mutual fund industry by adding another distribution channel — the e-commerce platform — to the already existing banks/independent financial advisors, national distributors and direct to customer.

SEBI’s thought process takes into account that inefficient players from every distribution channel would not survive. Those from existing channels may also take advantage of the expanding market place and tailor their offerings accordingly to survive first.

“E-commerce players have to register themselves with SEBI before offering mutual fund schemes. They would be required to have an ARN (AMFI Registration) number and NISM certification in place before they offer schemes on their platform,” said a CEO of a mutual fund. To ensure that investors do not end up buying products that they are not supposed to, as per their risk profile, SEBI is considering implementing suitability norms for products to be sold to investors based on their risk profile.

First-time investors would have to provide details about themselves on the e-commerce platform and only after their risk profile is ascertained would they be able to buy those mutual products, said sources. Rules and guidelines that are specific to selling mutual fund schemes by e-commerce platforms are in the process of being framed, they added.