Useful information in todays Hindustan Times - Repetitive KYC exercises are serious burden on small investors THE REALITY BEHIND KNOW YOUR CUSTOMER (KYC) 24 Mar 2014 Hindustan Times (Mumbai) [email protected] Repetitive KYC exercises are serious burden on small investors IF THE development of the retail financial services in India were to be measured by the amount of KYC (Know Your Customer) activity that is happening, then one couldn’t but conclude that such services were growing very robustly. In fact, given the enthusiasm with which banks, mutual funds ( MFs) and others are asking their customers to be ‘KYCed, re-KYCed and rereKYCed’, it’s possible that Sebi and RBI have secretly started setting KYC growth rate targets for the entities they regulate. It’s true that the regulators now claim that the process of positively identifying financial customers is now smoothened and deduplicated, but the reality is very different. In t he past week alone, just among people I personally know, I have come across three cases of banks and mutual funds (MFs) asking for KYC to be done again without any apparent logic. Moreover, service providers seem to ask for re-KYC not on the basis of precise guidelines, but on how brave or how cautious their particular compliance departments are feeling. That’s the reality behind this escalating KYC rubbish. Those who have serious volumes of money of uncertain origins will get away with it, while the small customers will bear the burden of this redundant activity. The Lok Sabha elections will probably see upwards of Rs 10,000 crore of expenditure. You can be certain that not much of that amount’s origins would stand up to any serious KYC exercise. But it doesn’t matter, because no one is going to be scrutinising that money with any enthusiasm. 24 Mar 2014 Hindustan Times (Mumbai) THE REALITY BEHIND KNOW YOUR CUSTOMER (KYC) Given the enthusiasm with which banks, mutual funds (MFs) and others are asking their customers to be ‘KYCed, re-KYCed and rere-KYCed’, it’s possible that Sebi and RBI have secretly started setting KYC growth rate targets for the entities they regulate There are cases of banks and MFs asking for KYC to be done without any apparent logic. Service providers seem to ask for re-KYC not on the basis of precise guidelines, but on how brave or how cautious their particular compliance departments are feeling This is the reality behind escalating KYC. Those who have serious volumes of money, of uncertain origins, will get away with it, while the small customers will have to bear the burden of this redundant activity.
Posted on: Mon, 24 Mar 2014 11:19:43 +0000
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