SEBI Chairman U K Sinha today said that the regulator is trying to reduce paperwork for intermediaries by introducing electronic KYC or e-KYC. He said that SEBI is likely to come out with a blueprint on e-KYC soon which will expedite the process of client verification. He said this at an ‘Investment Outlook 2015’ event held in Mumbai.
However, Sinha has not given any details on the structure and manner in which such KYCs will be performed.
e-KYC enables financial institutions to complete KYC process online with direct authorization of clients. By going electronic, fund officials say that KYC can be done on a real time basis. The key objective of e-KYC is to reduce turnaround time and paper work. Typically, KYC Registration Agencies (KRAs) take 8 to 10 days to verify a KYC application.
Earlier, SEBI had allowed fund houses to accept e-KYC of UIDAI as a valid proof for the KYC verification. The e-KYC service offered by UIDAI enables individuals to authorize service providers to receive electronic copy of their proof of identity and address. Investors have to authorize intermediaries to access their Aadhaar data through UIDAI system to avail this facility. However, it has not taken off in a big way due to lack of coordination between UIDAI, financial institutions and KRAs.
Banks and insurance companies are already using Aadhaar linked e-KYC service to carry out their KYC verification procedure. However, many banks and insurance companies insist on submitting physical documents even after carrying out eKYC.
It remains to be seen whether the new eKYC can address these issues and provide hassle free service to investors.
