Skip to main content

SC verdict may stall Aadhaar linkage to stock trading

SC verdict may stall Aadhaar linkage to stock trading
Last week, exchanges issued a circular, asking brokers to furnish Aadhaar details of all clients

 The Supreme Court (SC) ruling the right to privacy as a fundamental right under the Constitution has triggered uncertainty over the mandatory linking of Aadhaar for stock trading. Brokers said they will now wait for the SC judgment that will test the validity of Aadhaar. 

“We will wait for the judgment on use of Aadhaar. Any relief would be welcome for stock market participants. We don’t have any issue with Aadhaar, however, linking all accounts is a difficult and costly task for brokers,” said Alok Churiwala, managing director (MD), Churiwala Securities.

Last week, stock exchanges issued a circular, asking brokers to furnish Aadhaar details of all existing clients by December 31. In the circular, exchanges said the failure to submit documents within the time limit could result in a ceasure of accounts.

The move had sparked panic among the brokering community, who feared disruption in business.A lot of market participants had approached the Securities and Exchange Board of India (Sebi) and stock exchanges, citing challenges in implementation of the Aadhaar circular.

“We hope the implementation gets stalled. Small brokers are severely impacted by the move. The cost of compliance per client works out to be very high. Also, no investor can open a trading account without a bank account. Aadhaar is anyway linked to bank accounts,” said a broker.

Brokers said the exchange circular is retrospective in nature, as it would require them to redo the know-your-client (KYC) process for all the existing clients as well.

“The December deadline will be slightly cumbersome, in terms of achieving 100 per cent compliance. We have told stock exchanges to give us a year to complete the full database. There are legacy clients. There are a lot of investors who are not active now, but were active in the past. We have asked for time for such accounts. Even if we give notice, they won’t respond,” said C J George, MD, Geojit Financial Services.

Brokers said there is also the implementation issued in cases where the names of clients are different on their Aadhaar and Permanent Account Number (PAN) cards.

According to the depository data, there are over 20 million individual investors with demat accounts used for stock trading. Experts say some investors trade with multiple PAN numbers, and linking of Aadhaar will help weed out such investors.

The Business Standard, New Delhi, 25th August 2017

Comments

Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …