One of the reasons for the dwindling investor population in India is the complicated and drawn-out KYC procedure, say industry experts
The Indian government’s efforts towards strengthening identification norms have had an adverse impact in the most unexpected quarters. Apparently, the much talked about know your customer (KYC) norms are proving quite a deterrent for the population to put its money into various investment channels. The hassles of KYC documentation are creating obstacles in the path of investors and advisors alike.
Industry sources reveal that they have been having problems mobilising savings of individuals only because of the complications created by the necessity to adhere to KYC norms. An independent financial advisor (IFA) 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?”
Another IFA questioned the need for advisors to have their own KYC when the banks already have their own KYC procedures in place. This amounts to unnecessary and repetitive work, which delays the operationalisation of the customer’s account.
Pointing to one particular case where a non-resident Indian (NRI) wished to invest money into the Indian stock markets, the IFA revealed, “The NRI has to have not only his passport, but an account which mentions his local address and his American address. On top of that, he is required to show his driving license, which of course he does not carry to India. So even though he comes with a cheque of Rs50 lakh, he can’t complete his KYC and ultimately the country ends up losing the investment.”
In 2002, KYC norms were introduced in India with the RBI directing all banks and financial institutions to put in place a policy framework to know their customers before opening any account. 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.
The mutual fund (MF) industry has been most hit as a result of this. Already, the MF industry is under a lot of strain post the scrapping of entry load by the market watchdog, Securities and Exchange Board of India (SEBI). Moneylife has been regularly updating you through various articles on the agony faced by distributors and advisors in maintaining a steady stream of revenues. Hidden until now was the role of KYC in further alienating an already miniscule investor population in mutual funds.
It remains to be seen whether the government wakes up to this menace and simplifies KYC requirements before these norms threaten to disrupt investments into and within the country.
The 'MeeGo' software platform will run on high-performance devices and deliver a range of Internet, computing and communication experiences, with visually rich graphics, multitasking and multimedia capabilities and the best application performance
Computer processor manufacturer Intel Corp and mobile handset maker Nokia Oyj have said that both the companies will merge their Moblin and Maemo software platforms to create a unified Linux-based platform called ‘MeeGo’.
"Our vision for seamlessly communicating between computing devices from the home, auto, office or your pocket is taking a big step forward today with the introduction of MeeGo," said Intel president and chief executive Paul Otellini.
Olli-Pekka Kallasvuo, chief executive, Nokia said, "Through open innovation, MeeGo will create an ecosystem that is second to none, drawing in players from different industries. It will support a range of business models across the value chain, building on the experience and expertise of Nokia, Intel and all those who will join us. Simply put, MeeGo heralds a new era of mobile computing."
In a release, Intel and Nokia said that MeeGo will run on multiple hardware platforms across a wide range of computing devices, including pocketable mobile computers, netbooks, tablets, mediaphones, connected TVs and in-vehicle infotainment systems.
MeeGo also unites the robust worldwide Maemo and Moblin applications ecosystems and open source communities. For developers, MeeGo extends the range of target device segments for their applications. Using Qt for application development means that they can write applications once and easily deploy them on MeeGo and across other platforms, for example, on Symbian, the release said.
Nokia's Ovi Store will be the channel to the market for apps and content for all Nokia devices, including MeeGo and Symbian-based, with Forum Nokia providing developer support across all Nokia device platforms.
Since MeeGo runs on multiple device types, people can keep their favourite applications when they change devices, so they are not locked into one kind of device or those from any individual manufacturer, the release added.
The gap between planned investments in steel and aluminium projects has widened during 2003 to 2009 due to various issues like land acquisition problems and statutory permissions
While investments in steel projects have been on a constant rise ever since 2003, the gap between planned investments and implementation of these projects has more than doubled. Problems such as land acquisition, rehabilitation and permissions from various government authorities are cited as reasons for the widening of this gap.
According to data from ProjectsToday—a website that tracks various projects—in 2003, the total worth of investment planned in steel projects and the total worth of projects in the implementation phase were at par at around Rs25,000 crore. Post 2003, though the planned investments have increased rapidly, the growth in the implementation rate has been abysmal. During 2003 to 2009, planned investment in steel projects went up to Rs4 lakh crore while implementation miserably fell behind at Rs1.50 lakh crore.
“The high investments were encouraged by investment-friendly announcements by states like Orissa and Jharkhand, global demand for steel before recession and huge iron ore deposits. Due to these factors, the number of announcements for such projects increased and there were a number of memorandums of understanding (MOUs) signed for various projects. These reflect in the total amount (of) investments planned. But issues like land availability, other permissions like environmental clearances and rehabilitation plans pose a problem in actual implementation of these projects,” said Shashikant Hegde, chief executive officer, ProjectsToday and director, Economic Research India Ltd in the sidelines of Minerals and Metals Review seminar held last week.
In 2005, the total planned investment in steel projects was around Rs1 lakh crore. However, the rate of implementation continued to stagnate at below Rs50,000 crore with a marginal increase from the 2003 level. Post 2005, the gap between the total investments planned in steel projects and the amount of projects in the implementation phase increased drastically. From a marginal difference in 2003, the gap widened to Rs1 lakh crore in 2005–06. It further increased to a difference of Rs2 lakh crore in 2008. In 2009, the total planned investment in steel projects stood at Rs4 lakh crore against just Rs1.50 lakh crore worth of projects in the implementation phase, showing a huge gap of Rs2.50 lakh crore.
A similar scenario is playing out in aluminium projects as well. In 2002, investments in aluminium projects and projects in the implementation phase were below Rs20,000 crore. In 2003, the investment in aluminium projects increased to Rs40,000 crore, while the projects in the implementation phase stagnated at below Rs20,000 crore. In 2006, the investments in aluminium projects touched Rs1 lakh crore, while the projects in the implemented phase rose to about Rs30,000 crore. In 2009, the total planned investment in aluminium projects stood at Rs1.80 lakh crore and the worth of projects in the implementation phase stood at around Rs50,000 crore.