Sebi comes up with new guidelines for KYC registration agencies

Sebi on Wednesday issued new guidelines for KYC Registration Agencies (KRAs) whereby these agencies are required to independently verify the KYC records of all clients from July 1.

The move follows Sebi’s notification, in January, of new criteria to make KRAs responsible for conducting independent verification of KYC records uploaded to their system by Registered Intermediaries (RIs).



Under the reported rules, these agencies are required to maintain an audit trail of uploading/modifying/downloading with respect to KYC records of clients.

In a prospectus, Sippy said that KRAs will independently validate records of clients (existing and new) who have completed KYC using Aadhaar as a valid official document (OVD).

Records of clients who have completed KYC using non-Aadhaar OVD will only be validated upon receipt of the Aadhaar number.

The Securities and Exchange Board of India (SEBI) said: “Validation of all KYC records (new and existing) will start from July 1, 2022.”

According to the regulator, customers whose KYC records are not validated after the validation process will not be allowed to trade in the stock market only after their KYC has been validated by KRA.

The regulator has developed additional guidelines regarding KRAs in order to effectively implement the regulations.

KRAs will continue to serve as a repository of KYC data in the stock market and will be responsible for storing, protecting and restoring KYC documents.

During the verification process, KRAs will validate the details related to Aadhaar through India’s Unique Identification Authority (UIDAI) authentication, PAN using Income Tax Database, Mobile Number and Email ID using One Time Password Validation. This is applicable only in cases where the mobile phone number and email id provided by the customer is not provided with Aadhaar.

KRAs will develop systems/automation, in consultation with Sebi and in coordination with each other. It will follow standardized internal guidelines detailing aspects of defining KYC attributes and procedures for KYC validation.

RIs and KRAs will be integrated to facilitate the smooth movement of KYC documents.

KRAs will promptly notify the concerned RIs of the lack/inadequacy of the client’s KYC documents, if any, observed for validation.

Upon successful completion of the KYC validation process, Sebi said that a unique customer identifier called KRA Identifier will be assigned by the KRA to the customer. A client can use this KRA ID to open an account with any other broker, without repeating the KYC process.

The validation of KYC records for new customers, who have used Aadhaar as an officially valid document, will be validated within two days of receiving the KYC records by KRAs. All existing customer records will be validated within 180 days of July 1.

The KRA will have to report the customer’s KRA ID within two business days of receiving the KYC records. This must be done by post or email, and the respective KRA will have to keep proof of dispatch.

(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)

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