SEBI Guidelines for KYC Registration Agencies in India

All KRAs are registered under the SEBI Regulations, 2011. As stated earlier, the primary role of this agency is to maintain KYC records on behalf of the intermediaries registered to do business in public space by the market regulator. To aid this function, a financial intermediary such as mutual fund will perform the KYC on investors and provide the details to the KRA. An intermediary has immediate access to the details by means of accessing it from the agency. This is done to ensure that the process of verification does not have to be repeated when the client approaches an intermediary for investment.

The following companies are the registered KRAs with SEBI.

1. CSDL Ventures Limited
2. DotEx International Limited
3. Karvy Data Management Services Limited
4. NDML (NSDL Database Management Limited)
5. CAMS Investor Services Private Limited

Guidelines for KYC Registration Agencies

The KRA regulations issued by SEBI in 2011 guides the functions of these agencies. Some of the details have been provided below:

1. Documents received by the intermediaries from their clients shall be safely stored and safeguarded by the agency. Such documents should be available for immediate retrieval when required.
2. The agency is required to store the original documents of the client supplied by the intermediary in physical as well as electronic form. The KYC information retrieval should happen within the specified time period.
3. Update in KYC information of the client should be communicated by the agency to all the intermediaries involved in providing investment services to the client in question.
4. There should be a well-woven network among all the registered KRAs for smooth exchange of information within them.
5. After receiving the documents from the intermediary, the agency shall issue a letter of confirmation to the client and the status of KYC verification.
6. The system of the KYC Registration Agencies should have built-in checks in order to ensure that any intermediary can only access the information of an investor who approaches them after proper verification.
7. The KRAs must take precautionary measures along with regular audits of the systems so that there cannot be any unauthorised access to its database.
8. There must be sufficient backup of all electronic records available at a KRA, and it is the job of the agency to ensure that any data provided by the investors is not lost, destroyed, or tampered with.

Benefits of the KRA Route to KYC for clients and intermediaries

The most visible benefit of registering the KYC details with an agency is that it facilitates passage of critical information through a single channel. It avoids duplication of information and ensures accuracy since it's all stored in a single database with limited access to retrieve and modify. It also saves the clients from the inconvenience of providing documentation every time they apply for a service with an intermediary. It also saves huge amounts of physical and virtual space for the intermediary since documents need not be stored on company resources for new clients. They can simply contact the agency to verify the client information.

GST rate of 18% applicable for all financial services effective July 1, 2017.