Sebi simplifies intermediaries' KYC process when onboarding clients

This is a revision to the earlier circular issued by the regulator on April 6, 2022, which said that clients can only open an account after the KRA has validated their documents.

The market regulator has simplified the Know Your Customer (KYC) process for intermediaries when onboarding clients, by allowing clients to open an account immediately after submitting the KYC documents.

The Securities and Exchange Board of India (Sebi) has said that the verification of the documents can be done by the KYC Registration Agencies (KRAs) within two days from submission.

This is a revision to the earlier circular issued by the regulator on April 6, 2022, which said that clients can only open an account after the KRA has validated their documents and they have been assigned a unique identifier by the KRA.  Then the clients could use this identifier to open an account with any intermediary without having to do the KYC process all over again.

Now, with the new circular, the regulator has allowed for the verification to be done after the onboarding.

The KRAs will need to verify the data given in the client records of intermediaries, which includes PAN (including PAN Aadhaar linkage, as referred to in rule 114 AAA of the Income-tax Rules, 1962); name and address. The agency will also need to verify the client’s mobile number and email id.

If the client records do not have the requisite data, then the clients will not be allowed to transact further in securities market until the attributes (the data given) are verified.

Only client records that are complete with all the necessary attributes and are verified by the KRAs will be considered as validated records.

Only validated records will be allowed portability—that is, the client will not have to do the KYC process again when he/she approaches a different intermediary in securities market. The intermediary will have to fetch the validated records from the KRA database.

The circular added that the records of all existing clients, whose KYC has been completed based on officially valid documents (OVDs) other than Aadhaar, will need to be verified within a period of 90 days from September 1, 2023.