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20 Jul 2012 10:18 AM
SEBI relaxes KYD norms for overseas mutual fund distributors 
Ravi Samalad
 

Overseas mutual fund distributors are now not required to obtain NISM certification and are also not required to comply with KYD process.

In order to remove the entry barriers for getting foreign investments, market regulator SEBI has done away with know your distributor (KYD) norms for overseas mutual fund distributors. It has also said that overseas mutual fund distributors need not pass the NISM certification for selling mutual funds.

SEBI has stated that AMCs are required to ensure that distributors are compliant with extant laws where they operate at the time of empanelling them.

SEBI has written to AMFI on July 5, 2012 advising it not to insist on KYD for overseas distributors. However, the overseas distributors have to comply with the extant laws of jurisdictions where they carry out their operations. 

“Distributors had to visit India for KYD. SEBI wanted to remove entry barriers and bolster NRIs and QFI flow into Indian markets. Overseas distributors who are regulated under Financial Services Authority (FSA) need not register with AMFI or NISM,” says a marketing head of a leading fund house.

KYD rule came into effect with September 1, 2010. The KYD norms require in-person verification of distributors and bio-metric process. CAMS is responsible for processing the KYD data. As per industry estimates there are around 40,000 KYD compliant distributors. It is mandatory for Indian mutual fund distributors to be KYD compliant.


 
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