Industry leader shares different perspective on KYC issue

Industry leader shares different perspective on KYC issueD P Singh, SBI MF, Mumbai

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SBI MF recently achieved a huge milestone of crossing the coveted Rs.10 lakh cr AuM mark – a cherished dream for Team SBIMF. The manner it has consolidated its leadership position in the industry has been remarkable.

Distributor angst on frequent KYC changes and updates is understandable, but DP Singh asks MFDs to look at the broader perspective:

- Financial regulations globally as well as in India put more onus on anti money laundering (and therefore more stringent KYC) on investment products than on bank accounts. Some of the KYC requirements are beyond SEBI’s brief – they are part of global treaties that India is a signatory to.

- The current mandate to complete Aadhar and PAN matching and verification is quite likely to be the much-desired long term fix and one can hope for stability on KYC going forward.

- Distributors must also keep in mind that this is one of the few businesses where commission incomes keep rising for years with MTM gains. If we enjoy the fruits of being in the investment products business, we need to also comply with more stringent and evolving AML related regulations of this business.

MF industry is no longer a push-only business – it has demand pull as well as distribution push. Unfortunately, demand pull comes largely from fintech apps (in terms of number of folios) where investors continue to gravitate towards categories with the best past performance, even as the industry continues to push more balanced solutions from the hybrids range, to ensure smoother investor outcomes.

DP Singh says the biggest opportunity that is staring at our face is enhancing wallet share from existing SIP investors. The industry has over 8.75 cr SIP folios and over Rs.20,000cr collected each month. Each of these SIP investors is a big opportunity – to sell top-up SIPs, to increase SIP value or add more SIPs for more goals, offer hybrids for lumpsum investments. Any successful marketing enterprise drives penetration first and then drives usage. For our industry, driving usage is all about gaining more wallet share from each of your SIP clients.

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Comments Posted

R Sridhar ARN NO :137628 Pune, 27 Jun 2024

In my view theres no KYC needed for investment in mutual funds. The investment flows through the bank account only and the withdrawal also comes to the bank account only. The KYC is already verified at the bank and Pan and Aadhaar details are already available with the Bank. Strictly speaking this exercise is a duplication of efforts and huge waste of resources. Just because the banks are under RBI, sebi wants different guidelines. If the AmC people look at the kyc changes from 2008 onwards and understand the huge amount of time and efforts distributors and investors have had to devote in updating their KYCs they can understand the pain. Apart from that the frequent threat or actual freezing of folios due to kyc non compliance. Can you show a single developed country who freezes the investors money due to delay in KYC updation? If someone has a medical or other emergency what will they do?

VIJAY BHAGWAT ARN NO :ARN-10523 Belgaum, 27 Jun 2024

Vijay, I should thank you for bringing the problems faced by the MFD on this platform. As a MFD we never object for the laws brought to curb the money laundering. We respect and obey the law of land. But the way it is introduced is certainly disturbing. It should have been applied for the new KYC and not old. Since, earlier it was accepted and now you are changing . We as a MFD are getting more involved in solving old problems rather than concentrating on expansion of the business. I disagree with the statement made by Mr.D P Singh, that since we enjoy the fruits , we should be ready for more stringent regulations. Let SEBI bring regulations we as a MFD welcome it. I take this opportunity to Congratulate SBI team for first AMC to cross such a big mark in the history . Many more to come.

BHAVESH JITENDRA SHAH ARN NO :181726 AHMEDABAD, 27 Jun 2024

Not only MFD earns on the basis of MTM but also all employees & staff of AMCs are also enjoying the benefits of market movement in the terms of salary & PLB.