Skip to main content

Operational issues in new central KYC trip MFs

By
The Association of Mutual Funds in India (AMFI) has said it expects a significant spike in Know Your Customer (KYC) rejections and failures in opening accounts till fund houses adapt to the new Central Know Your Customer (CKYC) system.
The sector body recently wrote to the Ministry of Finance saying the CKYC data requirements and uploading processes are far more stringent and complicated compared with the current Securities and Exchange Board of India KYC Registration Agency (KRA) Regulations. Switching over to the new system would require extensive training for investors, distributors and staff in all mutual funds and their registrar and transfer agents (RTAs).
Regulators have instructed all financial institutions to use the CKYC registry, managed by the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) for new customers. The new KYC record-keeping agency is jointly promoted by the government and public sector banks.
The CKYC registry will now replace the multiple KYC-submission processes required to open savings bank accounts, invest in mutual funds and buy life insurance products into a one-time centralised process.
Banks and insurance companies were asked to upload new client details to the platform from July 15 and brokerages and fund houses from August 1. Cersai has appointed DotEx International, a group company of the National Stock Exchange, to manage the project.
Most of the AMCs, however, are continuing to use the KRA system established under Sebi KYC Registration Agency Regulations, 2013.
“Despite significant efforts in partnership with DotEx, only three out of 44 mutual fund AMCs have managed to complete the registration process with Cersai. The remaining mutual funds are either in the pre-production testing stage or document verification stage,” said the body in a note to the ministry last month.
The body has pointed out that the existing KYC information in the KRA database would need to be reviewed to identify missing information according to the new CKYC. This will require fund houses to approach investors individually to collect the missing information and documents.
“Upload of CKYC data requires a digital signature for both maker and checker. This would mean that mutual funds have to procure an adequate number of digital signatures for staff in more than 200 locations and impart proper training in using a digital certificate,” said the note.
Business Standard New Delhi,11th January 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more