SEBI notifies guidelines for KYC Registration Agencies

SEBI on Friday issued guidelines for Know Your Customer Registration Agencies and said wholly-owned subsidiaries of stock exchanges and depositories would be eligible able to act in such a role

Mumbai: To prevent duplication in customer identification process, market regulator Securities Exchange Board of India (SEBI) on Friday issued guidelines for Know Your Customer (KYC) Registration Agencies and said wholly-owned subsidiaries of stock exchanges and depositories would be eligible able to act in such a role, reports PTI.

The Securities and Exchange Board of India (KYC Registration Agency) Regulations, 2011, came into effect from 2nd December.

In August, SEBI had simplified the account opening process for investors. It had issued guidelines for uniform KYC requirements for investors while opening accounts with any intermediary in the securities market.

“To avoid duplication of KYC process with every intermediary, a mechanism for centralisation of KYC records in the securities market has been developed. An intermediary shall perform the initial KYC of its clients and upload the details on the system of the KRA (KYC Registration Agency),” it said in a circular.

When the client approaches another intermediary, the intermediary can verify and download the client’s details from the system of the KRA.

As a result, once the client has done KYC with a SEBI registered intermediary, he need not undergo the same process again with another intermediary.

“The board shall not consider an application, unless the applicant is a fit and proper person to the satisfaction of the board and (is)...a wholly owned subsidiary of a recognised stock exchange, having nation-wide network of trading terminals...” SEBI said in a circular.

Besides, wholly-owned subsidiaries of depositories, other market intermediaries and Self Regulatory Organisations would also be able to secure certificate for initial registration as KRA.

“The KRA shall obtain the KYC documents of the client from the intermediary as prescribed by the board and in terms of the rules, regulations, guidelines and circulars issued by the board or any other authority for prevention of money laundering, from time to time,” the regulator said.

The KRAs can, in co-ordination with each other, prepare operating instructions for implementing requirements under the guidelines and share data on KYC documents.

“KRA shall be responsible for storing, safeguarding and retrieving the KYC documents and submit to the board or any other statutory authority as and when required.

“KRA shall retain the original KYC documents of the client, in both physical and electronic form... as well as ensuring that retrieval of KYC information is facilitated within stipulated time period,” SEBI said.

Such agencies will also have to a compliance officer who shall be responsible for monitoring the compliance of rules and regulations issued by SEBI and the central government for redressal of client’s grievances.

Market intermediaries have been directed to upload KYC information of clients on the KRA system and send the original data to them.

An applicant for KRA status must also have a net worth of Rs25 crore and have expertise for technology and systems and safeguards for maintaining data privacy and preventing unauthorised sharing of data.

“The board, on being satisfied that the applicant is eligible, shall send intimation to that effect to the applicant, for the grant of certificate of initial registration...” SEBI said, adding that an initial registration would be valid for a period of five years.

KRAs would be eligible for applying for permanent registration three months before the expiry of the period of certificate of initial registration.

SEBI has also made provisions for inspections of KRA regarding books of accounts, records, infrastructure, documents and procedures.


RBI notifies separate NBFC category for MFIs

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore. It has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%

Mumbai: The Reserve Bank of India (RBI) on Friday approved creation of a separate category of non-banking financial companies (NBFC) for the microfinance institution (MFI) sector and specified that such institutions need to have a minimum net owned fund of Rs5 crore, reports PTI.

An RBI-appointed panel headed by YH Malegam had earlier this year recommended setting up of a special category of NBFCs operating in the micro finance sector.

The panel had suggested a minimum net worth of Rs15 crore for an entity to qualify as an NBFC-MFI.

“It has been decided to create a separate category of NBFCs—NBFC-MFI,” RBI said in a notification.

The RBI in its second quarter policy review in October had approved setting up of this category of specialised financial companies which would cater to low-income groups.

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore.

“All new NBFC-MFIs shall maintain a capital adequacy ratio consisting of Tier I and Tier II capital which shall not be less than 15% of its aggregate qualifying assets,” RBI said.

The RBI has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%.

Regarding loan disbursal and repayment by such institutions, RBI said that ‘qualifying asset’ shall mean loan disbursed to a borrower with a rural household annual income not exceeding Rs60,000 or urban and semi-urban household income not exceeding Rs1,20,000.

Also the tenure of the loan not to be less than 24 months for loan amount in excess of Rs15,000 with prepayment without penalty and the loan has to be extended without collateral.

The RBI has directed the NBFC-MFIs not to resort to any coercive methods and it would be repayable on weekly, fortnightly or monthly instalments.

Currently, out of the 300 MFIs in the country, about 70 are regulated by the central bank as NBFCs, accounting for the majority of the loans disbursed by the sector.

As per the norms, NBFC-MFIs can lend to individual borrowers who is not a member of more than one self help group. Also not more than two NBFC-MFIs should lend to the same borrower.

“All sanctioning and disbursement of loans should be done only at a central location and more than one individual should be involved in this function. In addition, there should be close supervision of the disbursement function,” RBI said.

Battling allegations of high interest rates and coercive tactics used to recover loans, the MFI sector has been facing hard times since October 2010.

Following a spate of farmer suicide, the Andhra Pradesh state government had in November 2010 promulgated an ordinance, putting curbs on MFIs.


Monday’s move to decide market direction: Friday Closing Report

Nifty may head to 5,170 if it holds above today’s high

Despite a flat opening, the market picked up momentum in the late morning session on across-the-board institutional buying and settled in the positive for the third day in a row. Today the Nifty rose 113 points on a volume of 55.06 crore shares on the National Stock Exchange (NSE), the lowest in the past four days. From here we may see the index moving to the level of 5,170 if sustains above today’s high. On the other hand, if the index is not able to maintain this rising trend, we may see it falling to around the level of 4,900.   

The market opened flat this morning as economic indicators pointed to a slowdown in the domestic economy amid global uncertainty. Also, pressure in the Asian markets in morning trade weighed on investor sentiments. The Nifty opened four points higher at 4,941 and the Sensex started the day at 16,494, up 11 points over its previous close. Profit booking following two days of gains soon led the benchmarks into the red and down to the day’s lows. At the lows, the Nifty touched 4,918 and the Sensex went back to 16,429.

However, a steady pace of buying lifted the benchmarks into positive terrain in late morning trade.  The upmove continued in subsequent trade supported by firm opening of the key European bourses and US stock futures trading in the positive.

The market hit its intraday high towards the end of the trading session with the Nifty crossing the 5,000 mark at 5,063 and the Sensex climbing to 16,888. The indices closed marginally off those levels, making it a third consecutive close in the positive. The Nifty gained 113 points to settle at 5,050 and the Sensex ended trade at 16,847, up 363 points.    

The advance-decline ratio on the NSE was in favour of the gainers at 1158:479.

Among the broader indices, the BSE Mid-cap index climbed 1.43% and the BSE Small-cap index rose 1.08%.

All sectoral gauges settled higher with the BSE Bankex emerging as the leader (up 3.26%). It was followed by BSE Poser (up 3.04%); BSE Metal (up 2.49%); BSE TECk (up 2.44%) and BSE IT (up 2.30%).

Hero MotoCorp (down 0.30%) was the lone loser on the Sensex today. The top gainers were Tata Power (up 6.30%); Tata Motors (up 4.57%); Tata Steel (up 4.04%); Sterlite Industries (up 3.79%) and State Bank of India (up 3.70%).

The major gainers on the Nifty were Ambuja Cements (up 8.10%); Tata Power (up 6.51%); BPCL (up 5.48%); IDFC (up 5.08%) and Tata Motors (up 4.81%). Hero MotoCorp (down 0.52%) and Ranbaxy Laboratories (down 0.26%) were the only losers on the index.

Markets in Asia closed mixed ahead of the US monthly payroll report and the European summit next week, where a detailed plan to resolve the debt crisis would be discussed.

This apart, China’s purchasing managers; index (PMI) tumbled to 49 from 50.4 in October, the lowest since February 2009.

The Hang Seng added 0.20%; the KLSE Composite rose 0.25%; the Nikkei 225 gained 0.54% and the Straits Times climbed 0.42%. On the other hand, the Shanghai Composite declined 1.10%; the Jakarta Composite lost 0.03%; the Seoul Composite shed 0.01% and the Taiwan Weighted fell by 0.53%.

Back home, foreign institutional investors were net buyers of equities totalling Rs687.26 crore on Thursday while domestic institutional investors were net sellers of stocks amounting to Rs713.08 crore.

Supreme Infrastructure has bagged two new road BOT projects—Jaipur Ring Road and Patiala Malerkotla Road—in addition to a project in the buildings vertical. The total value of the three projects is Rs1,248 crore. The stock gained 2% to close at Rs184 on the NSE.

Torrent Pharmaceuticals has received an approval of US Food and Drug Administration (USFDA) for its generic version of AstraZeneca’s hypertension drug Plendil. The approval is for 2.5 mg, 5 mg and 10 mg strengths of Felodipine extended release tablets to be sold on prescription basis. Felodipine is a calcium channel blocker (calcium antagonist), a drug used to control high blood pressure. Torrent Pharma rose 0.67% to close at Rs560 on the NSE.

Private sector lender Axis Bank on Thursday said it would raise Rs1,500 crore through bonds to fund its business growth. The board has passed a resolution approving allotment of unsecured redeemable non-convertible subordinated debentures on private placement basis as the bank’s Lower Tier II capital aggregating to Rs1,500 crore (including green shoe option of Rs500 crore). The stock rose 3.98% to settle at Rs1,011.30 on the NSE.


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