India’s market regulator, Securities Exchange Board of India (SEBI) through its notification on Nov. 5th, 2019 has updated the AADHAAR based eKYC process.
As per the notification, SEBI has removed the upper-limit clause on investment amount done through eKYC process. The previous version of eKYC process had a maximum investment limit of Rs 50,000 in a financial year.
Now the eKYC process can be completed through an online portal or through assisted investor eKYC process. The SEBI-registered intermediaries and advisor would able to complete the eKYC process by registering themselves with a KYC user agency (KUA) as a sub-KUA. KUAs are registered with UIDAI to facilitate the eKYC process.
The user details will be authenticated using a One-Time Password (OTP) sent to the user’s mobile. The new notification also restricts intermediaries to store the AADHAAR details of users.
The benefits of this latest notification will be applicable only to resident Indians.
The move is considered to be an important investor-friendly initiative by the market experts. Also, it paves the way for the expansion of the mutual fund industry, which is struggling to expand its reach. Currently, only 2% of the population invests in mutual funds, which is significantly less considering India’s population and capacity.
The notification said:
“Sebi-registered intermediaries for reasons such as online onboarding of clients, customer convenience, increased efficiency and reduced time for client onboarding would prefer to use Aadhaar based e-KYC facility to complete the KYC of the client”.