Single KYC Norms
It is well known that for quite some time, SEBI has been trying to push through the process of investing in stocks, Mutual Funds and commodities, by accepting the KYC norms prescribed for Banks. SEBI has also been making efforts to make the KYC portability becoming true, and in this direction the Law Ministry also has given a green signal, for Single KYC Norms portability, while reacting to a recent query from the Finance Ministry.
What is the advantage of Single KYC Norms?
If such a proposal comes through a bank account holder who has complied with the KYC norms in respect of a Bank account in line with the RBI guidelines, will be able to do trading in stocks as also in Mutual Funds, without undergoing a separate KYC compliance formalities with SEBI, which is not the case at present.
It is pertinent to add that at present, an Investor is required to comply with different KYC rules, under RBI, SEBI and IRDA guidelines, for Opening a Bank Account, Dealing in Shares and MFs and for dealing in insurance products respectively. If changes are brought in then the multiple KYC compliance by different regulators will be removed and a single KYC compliance will be accepted for all financial investments.
Further KYC portability will bring down costs for brokerages and mutual fund houses due to induction of new investors, since the current KYC processes makes it difficult for broking houses, to rope in new investors.