The Securities and Exchange Board of India (SEBI) recently issued a directive to KYC Registration Agencies (KRAs) relaxing the validation of Know Your Customer (KYC) records for NRIs. Following representations, representation received from NRIs, non-availability of source validation of passport and in view of facilitation of Aadhaar to NRIs by UIDAI, Sebi announced these changes to ease the KYC woes of NRIs.
Relaxation In KYC Record Portability: Sebi has relaxed the provision for the portability of KYC records for one year till April 30, 2025. The portability of KYC records means that clients whose KYC records are validated by the KRAs do not need to undergo the KYC process again when they approach another intermediary in the securities market. The intermediary can fetch the validated records from the KRA.
Sebi had earlier said that those clients whose PAN Aadhaar linkage is not found to be verified, shall be allowed to transact with the existing intermediary if PAN is valid but the client’s KYC shall not be allowed portability.
Easy Validation: Sebi said that validation of KYC using either a mobile number or an email address will be accepted and both of them are not required. "In order to facilitate ease of transacting in the securities market, validation of either one of the attributes namely mobile or email shall be considered necessary for allowing a client (including NRIs) to transact," Sebi's letter said.
NRIs faced troubles with KYC validation as their phone numbers linked to Aadhar are Indian phone numbers, causing OTP issues for them. Changing contact numbers after KYC validation has led to a “KYC On Hold” status for many of them, even preventing redemptions.
Redemption Allowed for Unverified Clients: The existing clients, as of March 31, 2024, in whose respect KYC attributes cannot be verified by the KRAs shall be allowed to exit through sale or redemption, etc., from existing investment in the securities market subject to adequate due diligence by intermediaries, Sebi said. The client's email shall be considered an optional attribute.
Many mutual fund investors have been troubled after the Securities and Exchanges Board of India (Sebi), made Aadhaar the only Officially Verified Document (OVD) for KYC verification. The majority of those who face problems have their KYC status as ‘KYC REGISTERED', making it impossible for them to invest in a new fund house. They are required to validate the KYC, by re-doing the KYC process with Aadhaar and hope for a 'KYC Validated' status to invest in a new fund. But these problems await them and intermediaries and investors have been calling for some interventions to streamline the KYC validation process.
