Good News For Stock Market Investors! Sebi Updates KYC Compliance Rule: Check New Guidelines

Under the new framework, KRAs can now verify PAN, name, address, email, and mobile number from official databases.
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Good News For Stock Market Investors! Sebi Updates KYC Compliance Rule: Check New Guidelines (Image Source: iStock)

Markets regulator Sebi has decided to simplify the risk management framework for validating Know Your Customer (KYC) records through KYC Registration Agencies (KRAs), a move that will ensure ease of transacting for investors, experts said on Wednesday.

What Changes Does It Bring?

Under the new framework, KRAs can now verify PAN, name, address, email, and mobile number from official databases. If these details are found to be in order, they will be considered validated records, Ankit Ratan, Co-founder & CEO, Signzy said.
"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.

Relevant Intermediaries Are Tasked To Implement Technical Changes

The exchanges, depositories, and relevant intermediaries are tasked with implementing necessary technical changes in their systems by May-end.
Compliance Tools And Risk Management Frameworks
Mutual fund houses, broking firms, and portfolio management service providers will need to implement robust compliance tools and risk management frameworks to safeguard investor data privacy and security.
Benefit Of It
This will help ensure that all investors are onboarded after identity verification.
KRA Entities
KRA involves entities such as CAMS KRA, BSE KRA, NSE KRA, among others.
Responsibility Of The Agencies
These agencies are responsible for maintaining the KYC details of individuals, typically gathering information from brokers, exchanges, and intermediaries.
New Guidelines
On Tuesday, Sebi simplified the risk management framework for ease of transacting by clients based on the feedback received from the stakeholders in the securities market. Simplifying the guideline, the regulator has modified the circular issued in October 2023.
Change In Verification Process
In October last year, the verification process underwent an update, invalidating proofs of address such as ration cards, electric bills, or scanned Aadhar cards.
What Is Rule At Present?
Presently, the mandate requires KRAs to verify certain attributes of client records within two days of receiving the KYC record, including Permanent Account Number (PAN), name, and address.
End of Article
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