On hopes recent government measures would draw more investors to the equities market, competition in the know-your customer registration agency (KRA) space is hotting up. And, Securities and Exchange Board of India (Sebi) Chairman U K Sinha has indicated more entities could enter the segment, in which four are already present. "We have a fourth player entering the KRA space, and I am sure there will be more players," Sinha had said last month.
Last month, CAMSKRA, a subsidiary of CAMS (which provides transaction processing services in the mutual fund industry), became the fourth company to jump into the KRA bandwagon, amid records of nearly half the equity investors being moved into the new system.
According to Sebi data, since the concept was introduced in January, 12.5 million KRA records have been created in the KRA system. The number of unique equity investors in the country is estimated at 25 million.
| KYC BUSINESS | |
| KRA |
No of KRA records |
| CVL | 9.2 |
| NDML | 2.2 |
| DotEx | 0.55 |
| About 12.5 million KRA records have been created Source: Sebi | |
A KRA is an entity that centrally maintains know-your-customer (KYC) records of investors on behalf of intermediaries such as brokers, asset management companies and depositories. KYC details of new clients entering the market are uploaded with any one of the four KRAs. Records of existing clients, too, are being shifted to the new system.
Currently, most of the business is generated by transferring records of existing clients to the KRA system. However, KRA firms anticipate new initiatives like zero-fee demat accounts, the Rajiv Gandhi Equity Savings Scheme and minimum allotment for investors in public offers would attract more investors to the equity market.
Recently, Sinha had said, "It took more than eight years for demat accounts to cross the 10-million mark, while we have crossed 10-million KRA entries in just eight months." He added the next 10 million records would be completed in a short time. "My feeling is more and more new entrants are coming into the system, as we have made it very convenient for investors," he said.
Currently, KRAs charge intermediaries about Rs 30 as a one-time uploading (creation) charge, which includes warehousing charge and about Rs 35 as fee for use (download) of KYC data by any intermediary that registers the investor as a client. Choosing among the three KRAs for uploading client information is at intermediaries' discretion.
About 70 per cent of the KRA market share is accounted for by the first entrant in the segment, CDSL Ventures, a subsidiary of BSE-promoted Central Depository Services. CDSL Ventures has uploaded 9.2 million records, while about 2.2 million accounts are with the National Securities Depository-promoted NSDL Database Management. National Stock Exchange-promoted DotEx has about half a million accounts.
