Writing in these columns some months ago (Please Give Me an Identity, ET, July 11, 2012), Janmejaya Sinha, administrator for Asia-Pacific at the Boston Consulting Group, declared in bright detail his travails aggravating to authorize his character afterwards he’d confused to a new abode in the aforementioned city.
Well, that was afore the contempo abbreviating of know-yourcustomer (KYC) norms and Sinha at atomic had the alleviation that he’d confused to a new and, presumably, bigger adaptation . There is no such alleviation for millions of others who will accept to abide similar, if not worse, travails; acknowledgment to awry KYC norms. Let me explain. I accept not confused residence. As a abiding chump of a alternate armamentarium (MF), all I basal to do was advance in addition plan of the aforementioned MF. But, like Sinha, I begin it cool to authorize my identity.
The actuality that I was already an broker with the aforementioned MF fabricated no difference. I ability accept been KYC-compliant beforehand , but not any longer. I was an old chump of the coffer that was allotment of the aforementioned accumulation and was absolutely KYC-compliant with the coffer was no acceptable either. MFs are absolute by the Securities Exchange Board of India (Sebi), and Sebi requires a abstracted KYC for basal bazaar intermediaries.
My troubles didn’t end with bushing up a beginning KYC anatomy with the all-important documentary proof. Reason? While I was KYC-compliant with one of the four Sebi-recognised KYC Record Agencies (KRA), my husband, a collective holder, was KYC-compliant with another.
Logically, that should not affectation a problem. But beneath Sebi rules, anniversary MF is appropriate to tie up with one KRA and KRAs don’t accomplish on a accepted belvedere . So, there is no way an MF can anon analysis the cachet apropos KYC-compliance if it is done by a altered KRA.
It’s a bit like adage if you are an Airtel subscriber, you can accomplish calls alone to added Airtel subscribers, not to subscribers on Idea or BSNL, etc. Or, as with ATM cards earlier, back you could draw banknote alone from ATMs of the aforementioned bank.
So, can one break the botheration by repeating the KYC assignment with the appointed KRA? Nah! The aphorism book — how we adulation to complicate matters! — additionally says that already you are KYC-compliant with one KRA, you cannot seek to be adjustable with addition KRA. Why? Because a distinct abiding anniversary cardinal (PAN) can be registered alone with one KRA. On the telecom analogy, already you are an Airtel customer, you are ashore with Airtel. You cannot about-face to Idea.
And, if, like a acceptable south Indian , your name is prefixed with initials, there is added trouble. Reason: the PAN, like the authorization , insists on the abounding name, never apperception if it is a mile continued and no one knows you by that name. Net result: as the rules stand, you can never be KYCcompliant back the name as per the PAN is not the aforementioned as in any added document.
So , what is an accustomed aborigine to do? About-face to gold, maybe! There’s little allurement to advance in banking instruments in any case; not back absolute ante of acknowledgment are negative. Add to that the amaranthine KYC hassles and gold wins easily down.
MFs appeal helplessness. It’s a Sebi claim and they accept to comply. Sebi, in turn, passes the blade to the RBI and government. The RBI (informally ) blames the government, decidedly the cool requirements of the Prevention of Money Laundering Rules.
It’s the aforementioned appeal the annex administrator of a nationalised coffer took back I accompanied my maid to the coffer to accessible a accumulation coffer anniversary in her name. She had an Aadhaar cardinal , and I, as a chump with the bank, was accommodating to acquaint her but the annex administrator would accept none of it.
The additional coffer additionally banned . But this time I stood my arena , aggressive the annex administrator with ‘dire’ after-effects : autograph to the chairman/ ombudsman, etc. Finally, I succeeded , but he was determined adage instructions from his arch appointment were clear. He bare an addition from an absolute anniversary holder.
So what happens to banking inclusion, to new barter who don’t apperceive an absolute chump ? Isn’t Aadhaar acceptable ? No, said the manager, Aadhaar alone certifies the being is the one mentioned on the Aadhaar form. It is not 100% foolproof. He showed me a blubbery book on an advancing analysis in a case area a accumulation anniversary had been opened and again acclimated to aggregate baseborn cheques . It was adamantine to argue him that one absorb does not a summer make. Or that the acceptable should never become the adversary of the best.
Unfortunately, all this is set to get worse. From January 1, 2012, in a bid to ‘simplify’ KYC requirements, Sebi has fabricated it binding for all absolute MF investors to abide a KYC Details Change anatomy to amend missing advice such as gross anniversary income/net account , etc. Additionally, armamentarium houses accept to do an ‘in-person verification’ of anniversary investor, which agency anniversary broker charge present himself physically afore MF officials.
Will all this end the affliction of money-laundering ? Not a adventitious ! We’ve had KYC rules for aing to a decade now and as letters and allegations, as yet unsubstantiated, show, they did not stop Indians from stashing money abroad. How can we get out of this mess? Simple! Accept one basal KYC aphorism with basal advice for all banking investments , with system-driven advertisement of affairs aloft a assertive pre-specified limit. Beyond that, as the 1980s bedrock bandage A Flock of Seagulls crooned , “Why can’t you aloof let me be, I’m an accustomed man.’
DISCLAIMER : Views bidding aloft are the author’s own.
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