SEBI Proposes Overhaul of KYC Norms to Ease Onboarding and Reduce Duplication

The Securities and Exchange Board of India (SEBI) has proposed significant changes to the Know Your Client (KYC) framework.  

These changes are designed to simplify client onboarding, minimise duplication across intermediaries, and improve risk management at KYC Registration Agencies (KRAs). 

Centralisation of Supplementary KYC Information 

A key proposal involves centralising supplementary KYC information such as income range, occupation, and FATCA details at the KRA level. Currently, this information is collected separately by each intermediary, leading to repetitive submissions by clients. 

Once uploaded and validated by a KRA, this information can be shared across intermediaries, reducing onboarding friction when an investor approaches a new market intermediary. 

Standardisation and Verification Enhancements 

SEBI has proposed standardising income slabs and allowing KRAs to tag independently verified supplementary information. This aims to improve the reliability and usability of KYC records. 

To address outdated KYC records, SEBI suggests that all KYC records be reviewed at least once every 5 years. KRAs would send automated alerts to intermediaries if a KYC has not been updated within this period, if an officially valid document has expired, or if a minor client has attained majority. 

Streamlined Processes and Documentation Relaxation 

The proposed framework includes relaxing documentation requirements for certain investor categories and streamlining processes such as account closure and mobile number verification. 

Updated information shared with one intermediary would automatically be made available to all other intermediaries dealing with the same client through the KRA system, reducing repetitive compliance exercises. 

Read More: SEBI Eases Technical Glitch Rules: Exempts 60% of Stock Brokers! 

Conclusion 

SEBI's proposed overhaul of KYC norms aims to simplify client onboarding, reduce duplication, and enhance the reliability of KYC records. By centralising and standardising key information, the new framework seeks to improve efficiency and reduce compliance burdens for investors and intermediaries alike. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.