 "Sebi to introduce e-KYC framework in two months")
According to sources, the market regulator plans to introduce an electronic, or e-KYC, format that will provide an option of conducting in-person verification (IPV) through webcams. The e-KYC process will streamline and simplify processes.
A senior Sebi official said e-KYC guidelines will be ready in two months.
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The new system is also aimed at reducing costs and expediting account-opening. Industry officials say a simplified KYC process has the potential of getting more people into the capital market.
Currently, IPV has to be done physically: An investor has to visit an intermediary or a representative is sent to the client. Market players say the current framework allows online IPV but brokerages do not offer this due to lack of clarity.
“Technically, e-verification is allowed but what we need clarity from the regulator is on the procedure and the manner in which this can be conducted,” said B Gopkumar, head (broking), Kotak Securities. “Once that is smoothened out, then the entire digitalisation process can be completed.”
Completing KYC formalities is mandatory for an investor for transacting in the securities market. Earlier, an investor had to go through the KYC process again while transacting with a new intermediary. For instance, an investor of HDFC Mutual Fund had to go through the KYC process again while investing in Reliance Mutual Fund. In 2012, Sebi introduced centralised KYC, under which an investor had to do KYC just once with any stock market intermediary — either a brokerage or a fund house. The centralised KYC process is handled by a Sebi-registered KYC registration agency which manages the process for a stock market intermediary. The e-KYC process will be implemented through these.
Sources said the regulator wanted to put in place more checks and balances to ensure the e-KYC process was not manipulated by investors.
E-KYC is also expected to bring down the cost of acquisition for brokers and the time taken to open an account. Currently, the cost of turning around a lead or acquiring a customer for brokerages ranges from Rs 10,000-12,000 for large ones or Rs 7,000-8,000 for smaller ones. This could come down to as little as Rs 4,000-5,000 once the process goes online. Similarly, the time taken to complete the KYC process online could be reduced to one-two days from the eight-10 earlier.
EASING OPENING OF ACCOUNTS
- Electronic know your customer (e-KYC) framework likely in two months
- Industry players seek online in-person verification through webcam
- Such online verification will complete digitisation of KYC
- Digitisation could bring down account-opening costs by half
- Account-opening time to come down to a couple of days from 8-10 now