SEBI Chairman UK Sinha is reported to have said at the Corporate Governance event today in Mumbai that SEBI is likely to come out with guidelines on electronic KYC soon to expedite the process of client verification. He said that the sub-committee headed by Nandan Nilekani, former UIDAI chairman has already submitted its report on electronic KYC.
Cafemutual spoke to a few media representatives and fund officials who attended this event to draft this story.
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.
