New Delhi: As government prepares to set up a central Know Your Client system for entire financial sector, details of close to 2 crore investors have been collated on a centralised database for various segments of capital markets.
In his interim budget speech, Finance Minister P Chidambaram said the government plans to "create one record for all financial assets of every individual".
The move is expected to help ease doing business for individuals as well as financial sector entities, including banks, insurers, mutual funds, brokers and others.
Following directions from capital markets regulator SEBI, a centralised KYC database has already been set up for all segments under its jurisdiction ,including mutual funds and brokerage firms.
Now, SEBI has cleared a proposal to allow market intermediaries to access investor details from these agencies, rather than carry out a fresh KYC verification procedure.
According to latest data available with SEBI, as many as 1.87 crore investors have provided KYC details to five KRAs (KYC Registration Agencies) registered with the market regulator at the end of December 2013.
"KRA system has been working smoothly and with inter-operability, there is easy exchange of KYC data among 5 SEBI registered KRAs," Securities and Exchange Board of India (SEBI) has said.
"As the system has stabilised and large number of clients have on-boarded into the KRA system, it is felt that there may not be a need to provide an option to the intermediary to seek documents already available on the KRA system from a KYC compliant client," it added.
Presently, market entities such as brokers and mutual funds have the option to either access the client information available with KRAs or carry out fresh KYC process.
However, SEBI observed that the option of taking fresh KYCs was provided in the regulations "to ensure that intermediaries equip themselves to the concept of KRA system, as the new system was expected to stabilise in due course".
The concept of the KRA system is been replicated by the Ministry of Finance which is working towards establishing a Central KYC system for the entire financial sector.
CDSL Ventures Limited (CVL), NSDL Database Management Limited (NDML), DotEx International Limited (DotEx), CAMS Investor Services and Karvy Data Management Services are the SEBI registered KRAs.
In course of time, the government intends to have one KYC norm across all financial sector regulators - including those for the banking, capital market, insurance and pension sectors.
First Published: Thursday, February 20, 2014, 13:49