KYC hassles put customers in a tangle

Customers are being harassed by banks & AMCs to submit KYC documentation despite furnishing relevant information beforehand

If you are an investor in a mutual fund or a credit card customer of a bank, chances are you have already been contacted by the company concerned to furnish a bunch of documents as proof of your identity. It does not matter if you have already submitted the documents to your broker or agent. This annoying facet is an inevitable outcome of the Know Your Customer (KYC) regime brought upon bankers, mutual fund companies and telecom operators.

Repetitive documentation and filing has ticked off hundreds of investors. An annoyed investor told Moneylife, “Recently, various asset management companies (AMCs) and banks have started asking me to furnish details of KYC certification along with documentary evidence. This was despite obtaining my certification from Central Depository Services Ltd (CDSL) two years back. When I requested them to obtain the same from CDSL directly in order to avoid unnecessary paperwork and duplicated effort to verify/re-verify the KYC particulars, they seemed a bit upset.”

Another investor had a similar experience. He said, “When I open an account with a broker, I submit all the details as required under KYC. In fact, the broker's representative has personally collected all the details after meeting me. So, when you are again asked to submit the same set of documents, it is enough to annoy you. My simple request to SEBI is, when investors have opened trading accounts with large brokerages and after satisfying all the KYC conditions, they should not be made to go through with this procedure again.”

Sources from the Reserve Bank of India (RBI) said that customers should comply with the requirements as it would benefit them in terms of safety, security and seamless flow of transactions. With SEBI piling the pressure on banks and AMCs to furnish KYC documentation of customers, these companies have been forced to round up customers for filing necessary documents.

A credit card customer of SBI recently received a letter from the bank seeking various documents under the KYC norms, despite the fact that all his details are already with the company. The letter stated that as per RBI guidelines issued on KYC norms, it is mandatory to periodically update the records with current information on the customers.

The basic purpose of KYC was to prevent identity theft, money laundering, terrorist financing, etc. This involves verifying customers' identity and address by asking them to submit documents that are accepted as relevant proof.

However, in most cases, KYC has only served to complicate procedures; requiring huge paperwork on part of service providers and making customers run from pillar to post for filing necessary or sometime irrelevant documents. To put things in perspective, an investor is required to sign around 80 times on a KYC form. The sheer volume of documentation necessitated acts as a huge deterrent for many investors.

An independent financial advisor (IFA) had earlier disclosed to Moneylife, “I have a customer who wants to invest Rs50,000 each in five different funds. For this, I have to give five different KYC documents for him and his wife, which is absurd. The issue here is, if you know the person’s surname and father’s name, date of birth and PAN card, there can only be one person whose details match. So why is the need for this unnecessary repetitive work?”




6 years ago

The Banks keep on asking for submission of KYC documentsreapitively even when these have been submitted in recent past. They should issue a letter for having accepetd the KYC documents and not call for the same again unless when due for revarification which should not be done before two to three years in normal circumstances.


7 years ago

This is exactly like the nexus between doctor and doctor, doctor and chemist, doctor and laboratory etc. For every medicine purchased, for every test conducted and for every reference made, the doctor gets a kick-back.
Now the RBI and all the subordinate agencies can receive their kick-backs. Imagine the kind of money this action generates for the photo-copying industry!
Every law made in our country and every directive issued is solely aimed at ensuring a new method of making money for some vested interests.


7 years ago

It is very true about the "KYC" that instead of helping the customers, this procedure is become a very irritating and frustrating,
The procedure is just one more example of how stupid the SEBI & RBI guidelines are. They have forgotten that rules/laws are made for the betterament of individual/society... But instead of that these authorities think people should live within the boundaries of rules/laws that too at their mercy.
I do not understand by repeadtely collecting the informations how they will ascertain the safety of an individual?? Previously there were several instances where the personal informations/data collected are been sold for mere 0.25 paise to 0.50 paise by ill minded personnels.
How SEBI & RBI will guarantee that such things will not be repeated from their end??? If any such thing happens again who will be responsible? SEBI? RBI? or the individual who parted the data???


7 years ago


K Narayanan

7 years ago

It is meant to harass the middle class and lower class-the cattle class so that the companies are flooded with so much documents and verifying so difficult and cumbersome paving the way for the smart money launderers to can get away.See the IPL drama.What is the source of money and what documents were verified.But for Shashi Tharoor's tiff with Modi the issue would not cropped up.Where were all govt agencies-don't they know about the huge money flowing.
The theory 'management by exception is given a go by' and the entire system is so crowded with paper work giving an excuse to the govt agencies to get away for turning a Nelson's eye.

Upendra G Deglurkar

7 years ago

I buy all my mutual funds from Still mutual fund companies asked for KYC details. They are with icicidirect and why can not they take it from them? By this logic all the stocks i own , the companies will ask me KYC details..



7 years ago

You can verify the KYC with CDSL online. Also the various service providers of Mutual Funds like CAMS and Karvy have online verification facility. Why harrass the poor investor. There should be a simpler solution for this. Hope the Aadhar (Unique ID) will solve it or will it add more hassle?

Around 2,200 local companies may go global by 2024

India is expected to produce the most new multinational companies, overtaking China as the emerging world's largest source of new multinationals

India may overtake China as the largest source of new multinational companies (MNCs) from the emerging markets, with over 2,200 domestic firms forecast to open overseas operations over the next 15 years, says a PricewaterhouseCoopers report.

According to the report titled ‘Emerging Multinationals’, the competitive landscape is set to be transformed over the next decade as Indian and Chinese multinationals lead the way in seeking new markets outside their home markets, reports PTI.

“India is expected to produce the most new multinational companies, overtaking China as the emerging world’s largest source of new multinationals. Over 2,200 domestic companies are projected to open operations outside over the next 15 years (between 2010 and 2024),” the report says.

Driven by the rapid pace of globalisation and revolution in information and communications technologies, the number of companies from the emerging markets choosing to set up operations abroad has increased in the past five years.

The report suggests this trend is expected to continue over the next 15 years, as new multinationals from emerging economies rise in prominence on the global economic stage.

“It is encouraging to know that India will replace China as the largest source of new MNCs in the emerging world from 2018 onwards. The key drivers for this are the relative increase in both investment intensity as well as openness that the domestic economy offers,” PwC India leader for markets and industries Jairaj Purandare said.

India and China would also be joined by an array of companies from Singapore, Russia, Malaysia and South Korea in terms of setting up MNCs.

According to the report, some of these new MNCs would become international powerhouses and would require services all over the world; for example, to support their IT and telecom networks.

The PwC report says more and more new MNCs are moving straight into the developed economies as opposed to setting up their first foreign operation in a neighbouring emerging market.

The global consultancy major used econometric techniques to project the number of new multinationals arising from a sample of 15 emerging economies over the next 15 years.

The countries analysed are Argentina, Brazil, Chile, China, Hungary, India, Malaysia, Mexico, Poland, Romania, Russia, Singapore, South Korea, Ukraine and Vietnam.



Shadi Katyal

7 years ago

It is hilarious to read such articles as China will sit back and wait. We should be devoting more time to present conditions of our industry and infrastructure and face the naked truth that we lack many resources like well trained labour, lack of power and above all working ethics and discipline but I presume we dont want to face the truth but rather day dream.We have similar optimism in the past but every year goal posta are pushed back.
China already has most of the latest equipment and technology to move ahead. She bought IBM personal computors and GM cars. Almost majority of products in USA are made in China from shoes to eye glasses frames and anything and everything.
china is already buying mineral resources in other lands along with oil and Gas and has reserves of more than 1.5 Trillions. She is building Railroads in Africa and yesterday news said we are far behind in our Road buildings.
Dreaming is good but must have some basis. Does India has that much foreign exchange that they will buy the world?

Over 3.7 lakh companies did not file accounts, annual returns for FY09

Courts have imposed penalty to the tune of Rs63.84 lakh for non-filing of these documents by these companies in the year 2008-09

Over 3.7 lakh companies have not filed annual returns and balance sheets, which is mandatory under the Companies Act, for the fiscal year 2008-09, Parliament was informed today, reports PTI.

While the annual returns and balance sheets for the year 2009-10 are not yet due for filing, there are 3,70,196 companies which have not filed balance sheets, and 3,71,110 companies which have not filed their annual returns, corporate affairs minister Salman Khurshid said in the Lok Sabha.

In a written reply in the House, he said that the courts have imposed penalty to the tune of
Rs63.84 lakh for non-filing of these documents by the companies in the year 2008-09.

The balance sheets and annual returns are required to be filed with the Registrar of Companies (RoC) by all the companies registered under the Companies Act, 1956, he said.

Similarly, for the fiscal ended 2007-08, over 3.03 lakh companies have not filed their balance sheets, while more than 3.07 lakh companies have not filed their annual returns.

The penalties imposed by the courts for non-filing of these documents by the companies during 2007-08 stood at Rs88.17 lakh, Mr Khurshid added.

Similarly for fiscal 2006-07, over 2.60 lakh companies have not filed returns and accounts and the courts have imposed a penalty of Rs94.66 lakh.


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