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The K.M. Chandrashekhar Committee on foreign investment has suggested that the know-your-customer (KYC) norms for foreign investors should be risk-based, according to sources.
In the risk-based KYC, foreign investors would be classified depending on the risk they bring in to the country based on the jurisdiction they belong to. Information would be sought from them according to the classification.
The committee, set up for unifying foreign investment norms, met in Mumbai on Tuesday.
This committee has suggested KYC norms and investment process for foreign investors to the Arvind Mayaram Committee to clear the confusion over FDI and FII investments.
The Finance Minister had announced in the Budget that all FII investment above 10 per cent in a company would be deemed as FDI and would have to comply with relevant regulations.
The Chandrashekhar Committee was for showing leniency in KYC norms towards investors belonging to the Financial Action Task Force signatory-countries (on money laundering) and regulated jurisdictions, confirmed sources.
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