Sebi Proposes New Standard for Mutual Fund Folios to Boost Compliance
Sebi has proposed a standardized process for opening mutual fund folios, ensuring compliance with KYC norms. The proposal addresses instances where folios were opened before KYC completion, causing operational issues for investors and fund houses. AMCs will create folios post-verification, and public feedback is sought by November 14.
- Country:
- India
The Securities and Exchange Board of India (Sebi) put forth a proposal on Thursday aimed at standardizing the procedure for opening mutual fund folios and making initial investments. The goal is to ensure these folios are created only after comprehensive verification.
This proposal addresses concerns arising from situations where folios were activated before the successful completion of Know Your Client (KYC) verification by KYC Registration Agencies (KRAs). Sebi has observed that current workflows occasionally lead to KYC non-compliance, posing challenges for Asset Management Companies (AMCs) and investors alike.
Under the new recommendations, AMCs will establish folios only after proper document verification per KYC norms, forwarding these to KRAs for conclusive validation. Investments will be permitted once KRAs certify the folio's compliance. Sebi has invited public input on this proposal, with a feedback deadline of November 14.
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