Investing through various stock market participants such as mutual funds (MFs), direct equities, portfolio management services and so on is set to become a tad easier with reduced paperwork now. With more and more KYC (know-your-customer) registration authorities (KRA) entering the market that facilitate one KYC for all types of investments through stock market intermediaries, getting yourself verified under the KYC norms is set to become easier.
Shyamal Banerjee/Mint
Till last year, if you had to invest directly in equity shares on the stock market and at the same time invest in MFs, you had to comply with KYC norms twice. While your stock broker or depository participant (DP) would do your KYC documentation for equity investments, CVL would do your KYC verification for your MF investments. Separate DP and brokerage accounts would call for separate KYC document verification. To streamline the KYC process and to ensure you do KYC verification just once, Sebi issued common KYC guidelines in December 2011.
Changes in the form
With a common KYC in place now, the KYC form has undergone some minor changes. The most important change is in-person verification. This means that whoever does your KYC, be it your broker, MF distributor or any intermediary, you will have to be present in front of him. You won’t be able to dispatch your documents through some other person and hope that your KYC gets done. Your distributor or intermediary can also send someone to your house or office for in-person verification, though.
Income slabs that your earlier KYC form used to club your income into have changed. The new KYC form also captures your marital status and nationality. Your KYC may be complete in most aspects, but typically if you would have done your KYC earlier, these details will eventually need to be updated. But you may not need to do the entire KYC process again.
Stocks: yes; mutual funds: no: If you have been investing in stocks, but not yet in MFs, submit your existing KYC proof to your fund house. Fill up the KYC update form along with the investment amount and your KYC will be updated. In-person verification may need to be redone but this can happen subsequently as your investments get processed. Here’s where a KRA like CAMSKRA has a slight edge. “In addition to being a KRA, it is also a registrar and transfer agent for many MFs. Investors can come to us with their MF application forms and their KYC proof or fresh KYC forms. In-person verification will also happen at the same time,” says N.K. Prasad, chief executive officer, Cams.
If you have traded (transacted which includes buying and selling of securities, transfer of securities, pledging of securities or for any alteration in demographic details of your existing account with any intermediary such as broker, DP or portfolio manager with whom you are registered) on or after 16 April, Sebi has given deadlines to intermediaries to upload the data to KRAs to get their systems updated. For any subsequent equity shares you buy through your own broker or any other broker, that broker is supposed to check only for the missing details in your old KYC form and merely update.
If you have not traded in any equity shares on or after 16 April, then your KYC may take a little longer as your records would still not have been captured in the system.
Stocks: no; mutual funds: yes: Here as well, your intermediary (CVL India since it was the sole agency to do KYC for MF investors) would eventually need to upload the KYC documents and data on the KRA platform. If you go to a stock broker because you’d like to invest in equities directly (for the first time), your broker will try and pull out your KYC data and check whatever information is missing. You will be asked to submit the missing data and your KYC would be done. You can then start investing in equities.
Stocks: no; mutual funds: no (first-time investor): This is the least complicated of the lot. Visit any stock market intermediary, fill up the new KYC form, submit relevant documents, get your in-person verification done at the same time and you’re good to invest in MFs, equities, portfolio management service and any other stock market intermediary.
Teething problems
Since KRAs are either just setting up shop or have recently started their operations, many problems remain. From uploading old as well as existing KYC records to facilitate a smooth flow of data from one KRA to another, it’s likely that your KYC will get delayed during the next few months.
For instance, it is not clear what happens if you did your KYC months or years ago and plan to invest either in MFs or equities now. If your earlier intermediary would not have uploaded your KYC details on the KRA platform, it could be a problem for your current intermediary to verify your KYC details. They might just tell you to fill up the KYC form again; this could result in duplication. “There is a small possibility for duplication. For all existing records to get updated, it will take some more time,” says Prasad.
Paresh Visharia, executive director, Ghalla Bhansali Stock Brokers Pvt. Ltd, says it could even take a little more than a year. “This is a time consuming process and there are a number of old records that need to be fed into the systems,” he adds.
As per Sebi’s guidelines, your intermediary should send your KYC details to the KRA within 10 days and the KRA should then upload them in the system (that can be accessed by other KRAs) within another 10 days, after verification is complete.
kayezad.a@livemint.com
