SEBI mulls using e-KYC for online MF purchase

The Nandan Nilekani panel, appointed by SEBI to look into the regulation of online product distribution, has already met thrice and is likely to come out with its recommendations in the next couple of months according to U.K Sinha, Chairman SEBI.

Speaking at the sidelines of the capital market conference of FICCI in Mumbai on Tuesday, Sinha said that SEBI plans tol use the electronic–know your client (e-KYC) services offered by the Unique Identification Authority of India (UIDAI) for enabling investors to buy mutual fund products online.

A SEBI circular of October 8, 2013 has already accepted UIDAI e-KYC as a valid proof of identity and proof of residence.

Sinha said, “There are millions of potential investors in this country who are buying products online and this buying has gone up in an exponential way. But there is some difficulty for them to buy mutual funds products online. So what can be done to make the process easy? With RBI and other entities bringing in payments systems to be online, may be there is some problem with our KYC norms. We are looking at our KYC norms on how to make it simple and easy.”

Sinha observed that SEBI was all for removing bottlenecks. “We all know what has been done by UIDAI in terms of Aadhar card. They also have started e-KYC whereby these bottlenecks are removed and people find it easy to invest.

On whether he would like to see e-commerce companies selling mutual funds schemes, Sinha said, “In fact we are looking to ensure that there is no need for any in-person verification or vet signature. So everything should be done over the net. If that is possible, then may be new companies will come.”