In a few months, you may be able to use your know-your-customer (KYC) registration with a mutual fund or depository participant to open a bank account or purchase insurance.
Financial sector regulators are veering around to a common KYC norm for investors across financial instruments - stocks, bonds, bank deposits and insurance and pension plans. While Sebi has already decided to move to a common standard for all products regulated by it, there has been discussion with other regulators on the subject. An official told TOI that while there is broad agreement on the issue, regulators wanted to try the Sebi experiment and are looking to plug into its system once it stabilizes in a few months. "But that's a few months away. It's not happening overnight ," an official at a regulatory agency said.
In due course, KYC done by one of the financial sector players may become the enabling tool for all products. The issue was discussed at a meeting of sub-committee of the Financial Stability & Development Council, an inter regulatory co-ordination mechanism set up last year.
A transition to a common KYC will come as a major boon for individuals, who have to submit all the documents - from identity proof to address proof - even if they open a second account in a branch in which they have a bank account for years. Similarly, even if you are buying a second or a third insurance cover from the same company, the entire documentation work has to be done all over again, which not only increases the procedural burden but also enhances transaction cost.
At present, it is only in case of mutual funds that one KYC clearance entitles investors to put money in multiple schemes. Over the years, with money laundering concerns on the rise, even KYC compliance norms have become stricter with individuals asked to periodically submit fresh documents to conform with the guidelines.
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