Online mutual fund distributors will soon be able validate customer KYC details online through Aadhaar.
A circular issued recently by the Department of Revenue, Ministry of Finance, said that companies other than banks bound under PMLA 2002 can carry out eKYC through Aadhaar based authentication.
Online distributors will have to apply to SEBI for permission for eKYC services. Following SEBI’s approval, the application will be sent to UIDAI. The unique identification authority will check if the distributors comply with cyber security norms. UIDAI will then forward the application to the government for final approval.
Mukesh Kalra, CEO ET Money sees this as a positive move for the industry. He however added that it is difficult to track if an investor has breached the Rs.50,000 limit given to him under eKYC.
Srikanth Meenakshi, co-founder FundsIndia said that the move would eliminate paperwork and make client onboarding efficient again. He also said that the industry is awaiting the final guidelines.
eKYC was discontinued in September 2019 after the Supreme Court directed fintech companies not to use Aadhaar based authentication.
