Thursday, January 5, 2012

Revision in Know Your Client (KYC) Norms and Procedure with effect from January 2, 2012


In line with SEBI Circular No. MIRSD/Cir- 26 /2011 dated December 23, 2011, SEBI KYC Registration Agency (KRA) Regulations, 2011 and SEBI Circular No. MIRSD/SE/Cir-21/2011 dated October 5, 2011 regarding uniformity in KYC process in the securities market and development of a mechanism for centralization of the KYC records, the following procedural changes shall be carried out with effect from January 1, 2012.

The primary objective of the revised norms is to implement uniform KYC norms and eliminate duplication of KYC across SEBI registered intermediaries in the securities market. For this purpose, KYC registration is being centralised through KYC Registration Agencies (KRA) registered with SEBI.


Thus each investor has to undergo KYC process only once in the securities market and the details would be shared with other intermediaries.

To bring uniformity in KYC process, SEBI has introduced a common KYC application form for all the SEBI registered intermediaries viz. Mutual Funds, Portfolio Managers, Depository Participants, Stock Brokers, Venture Capital Funds, Collective Investment Schemes etc. All the new investors are therefore requested to use the Common KYC application form to apply for KYC and mandatorily undergo In Person Verification (IPV) requirements with SEBI registered intermediaries including Mutual Funds.

Key changes in the KYC norms for mutual funds:
1.In-Person Verification (IPV) – It is mandatory for all the intermediaries to carry out IPV of their clients. For mutual fund investors, the IPV can be done by the AMC or the Registrar and Transfer Agents (RTA) or mutual fund distributors who have successfully completed the Know Your Distributor (KYD) procedure. Unless the IPV process is completed, the investor will not be considered as KYC compliant under the new KYC compliance procedure and hence will not be permitted to make any investment in mutual funds.


2.KYC application form – Some changes have been made in the existing KYC application form in light of the revised KYC norms. The new forms can be downloaded from AMFI website (www.amfiindia.com
) and also from the website of any SEBI registered KRA.


Impact on mutual fund investors:
1.Investors who have completed the existing KYC procedure (Existing MF investors) – These investors would be deemed to be KYC compliant for the purpose of MF investments. No further action is required and they can continue to use the KYC acknowledgment issued to them by CVL for MF investments.

However it will not be applicable for investments in securities market. These investors, if they wish to deal with any SEBI registered intermediary other than mutual funds, will have to follow the new KYC procedure.


2.New MF investors – Effective January 01, 2012, the above mentioned revised KYC procedure is applicable and the KYC acknowledgment issued by the KRA can be used for other investments in securities market.


3.New MF investors who have completed the existing KYC process with other intermediaries in the securities market (like depositories, stock brokers etc.), would be required to complete the new KYC process through KRA for investing in mutual funds.



Investors may also note that CDSL Ventures Ltd. (CVL), which has been acting as the centralised agency for carrying out KYC for the entire mutual fund industry, has recently obtained SEBI registration as a KRA.



What is the Effective Date?

The new forms will be applicable from January 01, 2012 and we advise you to use the new forms only. Kindly note that old KYC forms will not be accepted on and after January 01, 2012.
What is new in these forms?

Here are some salient changes in the KYC process, applicable forms and supporting documents requirements.
1.
For Individuals:

a.
Marital Status (mandatory),

b.
Unique Identification Number (UID)/Aadhar (Non Mandatory),

c.
Modification in slabs for Gross Annual Income Details, or

d.
Individuals have the choice to mention their Net Worth as on a recent date in lieu of Gross Annual Income Details.

2.
For Non - Individuals:

a.
Photograph of any one of the authorized signatories required on the form with signature across it

b.
Additional details like ‘Place of Incorporation’, ‘Date of commencement of Business’, ‘Net Worth as on a recent date’,

c.
Name, Photograph, PAN, Proof of Identity, Proof of Address of Karta/Partners/Trustees/Promoters(holding direct or indirect control)

d.
DIN/UID of Promoters/Partners/Karta/Whole Time Directors

e.
Copy of balance sheets for last two years; latest share holding pattern etc.

3.
In-Person Verification (IPV) - Mandatory: SEBI vide circular number MIRSD/Cir-26/2011 dated December 23, 2011 has mandated IPV for all new clients

a.
In case of mutual funds, the IPV can be performed by AMCs or AMFI/NISM certified distributors who have complied with KYD requirements.

b.
Further, details like name of the person doing IPV, designation, organization name, signatures and date of IPV should be are recorded on the KYC form at the time of IPV

c.
Hence, should you conduct the IPV in your capacity as distributors, kindly mention the details as required at the end of the form










KYC- Change of details

If you want to make changes in address in mutual fund records, now that is possible only when you go through changes in KYC details.

If you are KYC Compliant through CDSL Ventures Limited ( CVL ), please fill in KYC Details Change Form for Individual( For Change of Address ). You would also require to provide attested copy of the Identity proof and address proof as mentioned on the form. To check if you are KYC complaint visit http://www.cvlindia.com Inquiry on KYC. You need to submit the change of address form and the relevant document at any of Point of Services (POS) 

Only the Address details provided overleaf will be changed in the records of
the Mutual Funds/ Registrars. Such change will be effected for all folios
(identified by PAN). All other details viz. Name, Tax Status and Contact Details
will have to be communicated separately to the respective Mutual Funds/
Registrars for updation in their records.



Forms:



























































































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