Harassment of small investors by intermediaries SEBI n RBI and the unending kyc process ..

No other country harasses small investors and bank account holders like INDIA .Every few years accounts get forzen transaction blocks are enforced and people are put through unnecessary harassment in the name of KYC and KYC update.

The harassment is so blatent and the whole circus is so illogical that even the ex RBI Governor Subba Rao could not open his bank account .. but the royal family he belonged to ie RBI , very quickly changed rules to accomodate him, \but what about the mango man or aam admi or common man ?

Reserve Bank of India (RBI) Governor Raghuram Rajan highlighted the need to minimise the regulatory burden for things such as the Know Your Customer (KYC) norms. This was brought to his notice, he said, when he discovered that his predecessor, D Subbarao could not open a bank account in Hyderabad. 

https://www.business-standard.com/article/opinion/kyc-for-subbarao-114081700655_1.html

Now there is a fresh call by SEBI to update kyc if u have Aadhaar as proof while opening your mutual fund folio

https://cafemutual.com/news/industry/28658-tell-your-clients-to-revalidate-their-kyc-by-april-30-2023-to-avoid-disruption-in-transaction

Investor comments say it all about how lopsided the system is

Varun Vaid · 1 week ago `

As per best of our understanding, to do any kind of modification in KYC records, there is no digital process as on today. Investor or MFD has to do the needful via physical application only. Furthermore, KRAs have not provided any MFD or Investor any such provision where they can upload XML data for revalidation of Aadhaar as OVD for any such modification to take place. For NEW KYC such provisions are there & for existing physical updation is the only way. If there is such digital process kindly enlighten us.

Eswaran jayaprakash Kusuma · 5 days ago

It is true.unnecessary harassment by SEBI.introduction of kyc,Fatca,masking of aadhaar,now eaadhaar etc are cumbersome to follow. Investments are made by cheques and bank transfers.Banks have followed all KYC norms,linking of pan,aadhaar,phone numbers etc. Then why these formalities.duplication of work. They have to realise and Amfi should take steps..

Ravi · 1 week ago `

I request regulator to introduce mega KYC once and for all. Ask for Pan, Birth certificate, Aadhar, election card, driving license, Passport, Gas bill, electricity bill, mobile bill, bank passbook, school LC, ITR copy, mothers pan crd, fathers pan card, wife’s pan card, photo, finger print, retina scan and than for gods sake don’t ask to do KYC for coming 10 years Plz Plz..

Paresh Shah · 1 week ago `

Dear investor,
IF ALL YOUR PREVIOUS INVESTMENTS WANT TO REDEEM YOU HAVE TO PROVE YOURSELF AND If you want to reinvest in Capital Market please bring your Birth Certificate, Educational certificate, Marriage certificate, Pan card, Aadhar card, Driving Licence, Passport, Ration Card,Election certificate, All Bank account Details with current balance, all previous income tax return copy, with source of income Mobile Number with Bill ( Prepaid not allowed) valid Email proof all other utility bill in your names only if in the name of parents or grand parents provide notarized no objection certificate as all your documents is required by SEBI because they want 100 LAkh crore AUM

Shekhar Joshi · 6 days ago `

I think time has come to go for “Janhit Yachika” in Supreme Court to avoid Pain created by SEBI every few year’s. Rule’s should not be implemented for existing folios (folio’s generated before 1st Nov 2022).

Nilesh Dave · 6 days ago `

It’s really shocking for frequent changes every now and then. Investors are getting irritate and sometimes denay to invest on such issues. My experience says that NRIs are now reluctant to invest due to such different demand of papers very frequently.I don’t understand why AMCs are not coming forward to present the issue in front of authority otherwise it would be a challenging days for them in context of business provided they have no intention to abolish MFDs from the route

KYC Checking in India

To block terrorists from funding themselves through banking channels KYC or Know Your Customer registration came into existence…

India being India , the aam admi was bound to suffer as kyc became a tool of govt to harass people and remind them of the license permit raj. People call it Kill your Customer thanks to bureaucracy and red tape and multiple times one needs to do kyc.

There is no centralization of KYC registration, banks do them on basis of every account one has.

You require to submit your 1. Identity Proof and 2. Residence Proof.

To check if ur KYC is updated please follow links by clicking on them

Mutual Fund Kyc is centralized thank god for that . CVL handles MF KYC .

For Demat accounts two agencies do KYC

1. NSDL dbase NDML 

2. CDSL dbase CVL

The CDSL/CVL link deals with all kyc checks at the same time .

The KYC muddle – Cant I exist in peace ?

In the good old times, no one  questioned your existence whenever you needed to get rice, open a bank account , get a telephone or get a gas connection or buy a fixed deposit or mutual fund. It was a much slower process and waiting and lines were a norm. But there was no denial of service and thanks to the Indira Licence permit raj, speed money for everything was a norm.

There was the ration card with your entire family serially listed init in a local language with fancy spellings of names and that was about all one required to prove their identity. Ok there was the odd school and college id but no one really bothered. A passport was only for those that aspired foreign trips. GIR  was for filing tax returns.

The 90s bought Rupee devaluation and a sudden change from the Nehruvian 4% growth rate or a policy of socialist slumber,  as a payments crises and the terms set by the IMF  ushered in the liberalization policy under the Late P. V. Narasimha Rao govt. Nonetheless it made Mms famous as the great liberal (something which his current regressive policy action  has proven to be wrong)

The nation faced competition and a collective Identity crises as there was upheaval as MTNL  started providing an on demand telephone connection  … something unheard of in previous years.

Holy shit we were starring at Consumerism! The Sacred ration card became irrelevant as people could buy and more importantly afford to buy rice and other controlled things at the markets, that too free of adulteration.

The era also brought it with more regulatory bodies like the SEBI (1992) that brought on the mad rush called KYC or know your customer.

FATF on http://www.fatf-gafi.org KYC is not an option, but a global pressure, that is mindlessly implemented in India.

Each agency demanded and created their own I.D proof and insisting that people adhere by it. We evolved to becoming a more complicated polity who needed a documents galore to prove identity and existance.

1. Birth Certificate / School leaving certificate / College leaving cert etc and the  School, College, Work ID etc

2. Ration Card

3. Passport

4. Election Card

5. PAN card

6. Senior Citizens ID (for the extra .5% on fds)

7. Mutual Fund KYC by CVL

8. Finally the UID

I didnt mention MAPIN or Markets Participants and Investors Identification Number(which came and went)

We need at least a combination of 2/3 of these documents to partially prove our identity. For following KYC norms one has to be ready with the originals and xerox copies of not only these but also the latest

Gas / Electricity bill ,

Rent bill,

Telephone bill

Bank statement

Society managements letter.

That too in your name and living on rent, as a paying guest or with your family wherein their bills are sometimes no good and subject to the whims and fancies of the staff accepting your documents.  ( strangely 70% of people live in slums)

Remember each and every bank  now demands KYC  never mind if you have held the bank account or the fund for more than 2 decades and are a good friend of your bank manager makes no difference. They will freeze it if you dont .

Mutual fund have their KYC process but that is not enough, every form needs to be accompanied with a copy of both the CVL kyc acceptance and PAN.

Read mutual-funds-untangled

Post offices are unique cause their kyc process needs to be repeated every time you open an account …in triplicate or duplicate .

And one more thing KYC is an ongoing process where banks can demand documents repeatedly on a 2 /3 /5 yearly basis.

It makes sense and saves costs to keep a stock of multiple copy s of the above mentioned documents and photos because you need to repeat the same process at every single  bank, post office, mf etc

Miss one of the documents, or if it has errors  and you could be denied for no fault of yours.

Read : Denied passport for being an orphan – Mid Day

Its not enough to exist with the complications of daily life,  like competition, the servant that bunks work when you most need him/her, the problems of the nuclear family, shopping from the supermarkets as grocery shops have almost vanished from the area etc.

In the end, does it prevent Money laundering or the fraud or the crook ?

The simple answer is no…

Why?

Because it never prevented scams and scandals… We had scam after scam after scam and if that was not all a book by Sucheta Dalal n Debashis Basu called The Scam.

Read Sucheta Dalal :10 years of financial scams

The DIKs of the world still did their business of smuggling narcotics and terrorist support, and investing in property markets, share markets etc and still do.

Why?

Because we don’t have stringent laws against serious fraud or the will to take on the fraudsters… No class action lawsuits against cheaters and fly by night operators and no speedy trials …Heck most of these folks have political connections .

Take the Satyam/Maytas case wherein Raju committed fraud (some say it was induced by Andra Pradesh state elections) and was politically protected, and Indian shareholders to add insult over injury, had to pay off US Shareholders who banded up against Satyam in a class action suit. Big name independent directors like Harvard professor Krishna Palepu and ISB dean Rammohan Rao and Dham(The Pentium chip) didnt make a difference.

The scamster can easily get fake documents or bribe the staff or for the more sophisticated, route his investment through havala , tax havens or swiss banks, of course it is all possible tax free if one routes investments via Mauritius.

Better still he can follow the (rumored) lead of big Maharashtra politicians who use people like Hasan Ali to do their dirty work, which explains why the govt has been dragging its feet on identifying black money.

Read ‘Supreme Court order on black money is unique’

Supreme Court sets up probe into black money | Reuters