Industry officials say that capturing income details in KYC forms may not be mandatory anymore.
SEBI has modified account opening forms (AOF) by doing away with annual income and occupation details of clients to be captured in KYC forms.
It has now been decided in consultation with various market participants to shift certain information (annual income, occupation) in Section C of Part I to Part II of the account opening form AOF (for both individuals and non-individuals). Part I contains the basic KYC details of the investor used by all SEBI registered intermediaries and Part II captures additional information specific to the area of activity of the intermediary.
“Information contained in revised Part I of AOF shall only be required to be captured in the systems of KRAs,” SEBI said.
SEBI has given a timeframe of six months to make modifications to KYC forms.
“The modifications would assist in avoiding repeated modifications in the KRA system as information provided by the clients in Section C changes over a period of time and will facilitate in making the KYC uniform for the entire financial sector,” said SEBI circular.
Distributors say that the KYC norms are stringent for non-individuals as they have to furnish their financial details every year. “Companies and partnership firms are supposed to submit copy of the balance sheets for the last two financial years. This is required to be submitted every year which is a tedious process,” said a Mumbai based distributor.
Jimmy Patel, CEO, Quantum Mutual Fund said “Income and net worth data will still be required to be captured in order to comply with Prevention of Money Laundering Act (PMLA). If a client shows income of Rs. 5 lakh and invests Rs. 1 crore then we have to verify such details. Some clarity is required on this issue.”
“Client’s income can change every year and this was not getting updated in the systems of KRAs since it is not feasible to perform KYC multiple times, said Vinayak Sapre of VVS Ventures.
