Only about 10% of the distributors have completed the KYD procedure so far; two months left for compliance
Mumbai: Only about 10 per cent of the over 81,000 mutual fund distributors have complied with the new Know Your Distributor (KYD) requirements, almost four months after it was made mandatory.
AMFI, following a directive from SEBI, had asked distributors to comply KYD requirements from September 1, 2010.
Industry sources said “Just 8-10 per cent of the distributors have completed the KYD procedure yet. This number also includes intermediaries who have newly registered as mutual fund distributors and those who had to renew their ARN (AMFI registration number).
An industry official fears that there could be a huge backlog at CAMS, a registrar and transfer agent, if the distributors decide to comply with the KYD norms in February. AMFI has engaged the services of CAMS to complete the KYD process. CAMS officials could not be reached for any comments.
If distributors fail to comply with KYD norms by February 28, 2011, AMFI will be forced to ask mutual funds to withhold commissions to distributors who are not KYD compliant.
Distributors are required to fill up an application form and furnish two self-attested passport-size color photographs and self-attested photocopies of identity proof and address proof. The procedure also requires distributors to give their fingerprints. There is some discontent among IFAs who feel that the biometric requirement invades their privacy.
CAMS is conducting KYD requirements 60 locations across India which are called KYD POS (points of service) where distributors can submit their documents. In Mumbai the registrar has two offices, one in Fort in south Mumbai and the second one at Vashi in Navi Mumbai. All distributors in and around Mumbai suburbs thus have to travel to Fort to submit their documents.
