Markets regulator Sebi on Friday proposed measures to ease the client onboarding process and strengthen the risk management framework at KYC Registration Agencies (KRAs) from the perspective of customer identification and due diligence.
These measures included centralising the supplementary information provided by clients during onboarding at the KRA level. Through this, Sebi is aiming to eliminate the need for investors to submit the same information multiple times when approaching different intermediaries.
To maintain the integrity of this data, Sebi, in its consultation paper, has proposed that KRAs should be responsible for notifying intermediaries to update client records whenever a minor turns 18 years, an identity document expires, or a record has remained unchanged for five years.
The proposed framework also focuses on reducing redundant verification steps and simplifying documentation. For instance, if a client's mobile number is already linked to Aadhaar within the KRA system, intermediaries will no longer be required to perform independent verification. Further, clients who have updated their names on their PAN and Aadhaar will no longer need to submit separate proof of name change to intermediaries, the Securities and Exchange Board of India (Sebi) said.
In an effort to support global residents, Overseas Citizen of India (OCI) cardholders residing in India for more than 182 days will find the requirement for an overseas address becomes optional, provided they supply proof of their Indian residence, the regulator proposed. To ensure these changes are reflected quickly across the financial ecosystem, Sebi has proposed introducing timelines for data synchronisation.
Under the timelines, intermediaries should be required to inform the KRA of any account closures within three working days, and they should update their records within the following two business days. This flow of information ensures that once a KYC record is updated or "validated" at the KRA level, especially regarding source-verified addresses, it can be shared with other intermediaries without the need for repetitive source verification of the current address.
Sebi has suggested a transition plan for existing records to bring them up to modern standards. Intermediaries should be granted a three-month window from the issuance of the circular to update records for clients who have reached adulthood, those with expired IDs, or those whose KYC has not been refreshed in five years.
Additionally, all existing supplementary client information should be uploaded to the KRA system within six months. "These measures are aimed at easing the process of account opening for clients and intermediaries, ongoing due diligence as well as rationalising the risk management framework at KRAs," Sebi said.
Sebi has sought public comments till January 31 on the proposals.
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