• Source:PTI
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The market regulator Securities and Exchange Board of India (SEBI) has decided to simplify the risk management framework for validating the Know Your Customer (KYC) records through the KYC Registration Agencies (KRAs), a move which would ensure ease of transactions for investors. Under the new framework, KRAs can now verify PAN, name, address, email, and mobile number from the official database. If these details are found to be correct, they will be considered valid records, said Ankit Ratan, Co-Founder and CEO, at Signzy.

"The new framework is expected to address challenges faced by many investors while also ensuring the verification of investors' digital identities. With a growing number of investors embracing digital platforms for investment, verifying digital identities has become increasingly important," he added.

Exchanges, depositories, and related intermediaries have been tasked to implement the necessary technical changes in their systems by May-end. Mutual fund houses, broking firms, and portfolio management service providers will need to implement robust compliance tools and risk management frameworks to protect investor data privacy and security. This will help ensure that all investors are included after identity verification.

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KRAs include institutions such as CAMS KRA, BSE KRA, and NSE KRA. These agencies are responsible for maintaining the KYC details of individuals, usually collecting information from brokers, exchanges, and intermediaries.

SEBI on Tuesday simplified the risk management framework for ease of transactions by customers based on feedback received from stakeholders in the securities market. The regulator has amended the circular issued in October 2023, simplifying the guidelines.In October last year, an update was made to the verification process, making address proofs like ration cards, electricity bill or scanned Aadhaar cards invalid.

Currently, the order requires KRAs to verify certain attributes of customer records, including permanent account number (PAN), name, and address, within two days of receipt of the KYC record.

"Going forward, the client's records verified by KRAs with official databases (Income Tax Department database on PAN, Aadhaar XML, Digilocker or M-Aadhaar) will be considered 'validated records'. Individuals with invalid documentation will not be permitted to trade in the securities market," Feroze Azeez, Deputy CEO of Anand Rathi Wealth, said.

He said that this initiative of SEBI serves to protect the interests of investors in securities and promote the development and regulation of securities markets, which is an important step in consumer protection.

Signi Ratan said that this step of SEBI will ensure the protection of the interests of investors in the capital market and promote the development of security markets. This represents an important step towards increasing digital trust and creating a safe digital environment for investors.

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(With PTI's input)