Sebi extends KYC deadline for demat
To open a trading-cum-demat account with a
broker, you must first complete know your customer (KYC).
RBI extends deadline for periodic KYC update to March 31, 2022
Why
does SEBI require KYC before a demat account can be opened?
The idea is that the customer has all of
the necessary documentation and that the flow of funds can be traced through
banking channels. According to SEBI regulations, it is no longer feasible to
open a demat account without first completing your KYC.
The DP / broker will require you to fill
out a KYC form together with your client agreement form when you open a Demat
account. KYC requires some basic paperwork and the submission of required
papers, including originals, for verification.
First
and foremost, what is the purpose of KYC?
The RBI issued KYC guidelines in 2002,
which SEBI has implemented for all investment-related operations such as
opening a trading account, a demat account, or investing in mutual funds. Money
laundering, acting as fronts for organizations, trading in cash without audit
trails, fraud, and financing of anti-national actions were all part of the
plan.
Your data is saved in a central database
after the KYC has been in place, so you only have to do it once. After then,
it's merely a matter of linking your PAN card to the central database and
retrieving it. Banks and other financial institutions can use KYC to keep track
of their customers' transactions. This also helps to connect all of your
capital market activities to your bank account and tax returns, filling in any
reporting gaps. For mutual fund accounts, demat accounts, and trading accounts,
SEBI has made KYC compliance mandatory.
Important
steps in the demat account KYC documentation process
If you are a new investor, the first step
is to complete the KYC form and open a demat account for the first time. Name,
residential address, office address, joint account holder information, account
nomination, and other information are requested on the application forms.
The next step is to show your proof of
identity. Apart from the PAN card, which is required, you will usually be asked
to show additional government-issued identification such as a passport,
driver's licence, voter ID, Aadhar, and so on.
The next step is to provide confirmation of
your current residence address. The most recent address must be included in the
document in the exact format. Utility bills can be accompanied by link
documents or other documents such as bank statements, corporate letters, and so
on.
Finally, a copy of your cancelled check
with the account holder's name clearly embossed on the cheque leaf must be
submitted. This is to ensure that your IFSC code and account information are
correct.
While all of the above papers must be
submitted as photocopies at the time of KYC, you must bring the originals with
you for spot verification.