Customers within KYCing distance

The investors’ paperwork, when it comes to dealing with his financial investments, is expected to be soon reduced substantially. The finance minister’s proposal to put in place a central Know Your Customer (KYC) depository, popularly called the KYC Registration Agency (KRA), will eliminate duplication of efforts on the part of investors and companies.It will also have several long-term positive implications for investors and companies alike in the financial sector.
So, when an investor registers himself with one pan India KRA, it will be valid for all his subsequent investments and relationships, be it banks, stocks, mutual funds, insurance and pension products, etc. This is a departure from the current structure, under which the investor has to do his KYC registration individually for banks, insurance companies, Sebi-registered entities like stock market and mutual funds, etc.
In the new dispensation, if an investor has to update his KYC details, all he has to do is contact his KRA and in a few days all the changes will be effected across all the financial services companies he deals with as a customer or investor, explained Cyrus Khambata, MD, CDSL Ventures, the first Sebi-registered KRA for the stock and mutual fund industries.
In addition, since such KRAs come directly under the government or a government-appointed regulatory body, all the services are free of cost. “Such a set-up brings in uniformity in the way client database is maintained, saves duplicity of efforts and also cost for investors as well as companies,” Khambata said.
The FM on Friday said that to bring banking payment structure on a par with global standards, among several steps, the government was planning to set up a central KYC depository next fiscal which will avoid multiplicity of registration and data upkeep. At present, there are two KRAs in the market which offer similar services to all the companies regulated by Sebi. For the convenience of investors, it is mandatory that all the KRAs under Sebi regulation should share customer data. Market players feel since Sebi has already gained some experience regulating two KRAs, the government is likely to draw from the market regulator’s experiences when it sets up such agencies that will cater to all the financial services companies.
Budget 2012
Budget News 2012