The Securities Exchange Board of India (SEBI) has issued a set of new Know Your Customer (KYC) rules for investors in Indian capital markets through a master circular released on Thursday. This master circular is a compilation of various directions issued by the regulator until September 30 and includes modifications to align these circulars with the Prevention of Money Laundering (maintenance of records) Rules 2005. These changes must be implemented by December 31, 2023.
Here are the key rules outlined in the master circular:
- Uniform KYC Form: All SEBI-registered intermediaries must use the same KYC form and supporting documents for customer onboarding. The account opening form for clients will be divided into two parts. Part I will capture basic client details, while Part II will obtain additional information specific to the area of activity of the intermediary. The master circular primarily deals with the provisions of Part I of the KYC form.
- PAN as Unique Identifier: PAN (Permanent Account Number) will serve as the unique identification number for all participants conducting transactions in the securities market, regardless of the transaction amount. Registered intermediaries will verify their clients’ PAN online through the income tax website, eliminating the need for the physical PAN card.
- Exemptions to PAN Requirements: Some exemptions to PAN requirements include Systematic Investment Plans (SIP) of mutual funds up to ₹50,000 per year. The name on the KYC form must match the name as mentioned in the proof of identity submitted.
- Acceptable Proof of Identity: Documents accepted as proof of identity include a passport, driver’s license, Aadhaar number, voter’s ID card, a letter issued by the National Population Register (NPR), and any other document as notified by the Central Government in consultation with the regulator.
- Name Change on Official Documents: A document will be considered an officially valid document even if there has been a change in the name after its issuance, provided it is supported by a marriage certificate issued by the State Government or a gazette notification indicating such a change of name.
- Additional Requirements for Non-Individuals: Legal entities such as trusts, partnership firms, Hindu Undivided Families (HUFs), and registered societies are subject to additional document requirements.
- Mobile Number and Email Address: Registered intermediaries must upload the details of clients’ mobile numbers and email addresses on the KYC Registration Agency (KRA) system.
- Reliable In-Person Verification: The in-person verification conducted by one SEBI-registered intermediary can be relied upon by another intermediary.
- Acceptance of e-KYC: The e-KYC service launched by the Unique Identification Authority of India (UIDAI) will be accepted as a valid process for KYC verification.
These new KYC rules are aimed at enhancing the efficiency and uniformity of the KYC process for investors in the Indian capital markets.