Here are some frequently asked questions (FAQs) on ‘know your client’ registration agency (KRA).
What is KYC and what are the latest regulatory guidelines in this regard?
KYC is an acronym for “know your client”, a term commonly used for the client identification process. SEBI has prescribed certain requirements relating to KYC norms for financial institutions and financial intermediaries, including mutual funds, to ‘know’ their clients. This would be in the form of verification of identity and address, obtaining information of financial status, occupation and such other demographic information.
With effect from January 2012, SEBI has set out revised KYC norms to make the process uniform across the securities market and introduced a common KYC application form for all SEBI registered intermediaries, namely, mutual funds, portfolio managers, depository participants, stock brokers, etc.
Investors must, therefore, now use the uniform application form to apply for KYC at the time of investment in mutual funds.
In the revised KYC regulations, in-person verification has been made mandatory for mutual fund investors as well.
What is a KRA?
A KYC registration agency is an agency registered with SEBI under the Securities and Exchange Board of India (KYC Registration Agency) Regulations, 2011. The KRA maintains KYC records of the investors centrally, on behalf of capital market intermediaries registered with SEBI.
An intermediary, for example mutual fund/broking house/depository participant, shall perform the initial KYC of its clients and upload the details on the system of the KRA. When the client approaches another intermediary, the intermediary can verify the client’s details with the KRA.
As a result, once the client has done KYC with a SEBI-registered intermediary, the client need not undergo the same process again with another intermediary.
Have KRA services been launched?
SEBI has accorded KRA licence to CDSL Ventures Ltd, NDML, Dotex and CAMSKRA, a wholly owned subsidiary of CAMS and all four entities have launched services.
How does the KRA benefit investors and intermediaries?
Registering KYC with a KRA not only prevents duplication and inconvenience, but it also enables single-point change management. As an investor, if one is registered as KYC compliant with any KRA, he can open an account easily with any SEBI-registered intermediary without going through the KYC process once again. Any subsequent changes in investor static/demographic information of an investor across various SEBI-registered intermediaries can be made by giving a single request to one of the registered intermediaries who will carry out the change.
Further, market intermediaries who register with KRA also benefit as they need not collect documents from KYC-compliant clients, thus eliminating the need to store them.
How does a mutual fund investor complete KYC verification according to the latest SEBI guidelines?
Mutual fund investors can walk into fund branches or their registrar and transfer agents’ (RTAs) service centres to submit their transaction and KYC forms. RTAs are permitted to carry out the KYC services including in-person verification ( IPV) on behalf of the mutual funds. Hence, mutual fund investors can avail of single-window services for both KYC and transaction acceptance with RTAs. Alternatively, an NISM-/AMFI-certified and KYD-compliant distributor can also carry out the KYC process including IPV.
(Contributed by CAMS Viveka, an Investor Education Initiative from CAMS. Views expressed are general practices in the MF industry and may vary on a case-to-case basis).