Guidelines for implementing SEBI’s KRA Regulations
SEBI has issued guidelines for the implementation of SEBI KYC Registration Agency (KRA) Regulations, 2011, which will come into force from January 1, 2012 for all new client accounts. For intermediaries, the regulator has stated that post completion of the initial KYC of new clients, intermediaries are required to upload that information on the system of the KRA and send the KYC and supporting documents to the KRA within 10 working days from the date of receiving them from the client. If some information or supporting documents thereof are found wanting by the KRA, intermediaries will be required to provide the same promptly.
For existing clients, the present KYC data can be used by intermediaries if they are in conformity with details sought in the uniform KYC form, else seek required details. The guidelines allow intermediaries to maintain electronic records of KYCs, thus not requiring physical records.
KRAs are required to send a letter to the client within 10 working days of the receipt of the initial or updated KYC documents from an intermediary. They will also be responsible for developing such systems so as to avoid duplication of KYC details of a client and to ensure uniformity in formats of uploading / modification / downloading of data. KRAs have also been mandated to maintain an audit trail of the upload / modifications / downloads made in the KYC data, by the intermediary in their system. Importantly, the guidelines state that clients can start transacting with intermediaries as soon as the initial KYC is done ‘and other necessary information is obtained while the remaining process of KRA is in progress.’
SEBI has made In-Person Verification (IPV) to be mandatorily undertaken by all intermediaries concerned with the circular. Till now, it had issued guidelines in this regard to only stock brokers and depository participants (DPs). However, the ‘IPV carried out by one SEBI registered intermediary can be relied upon by another intermediary.’
In case of Mutual Funds, their Asset Management Companies (AMCs) and the distributors who comply with the certification process of National Institute of Securities Market (NISM) or Association of Mutual Funds (AMFI) and have undergone the process of ‘Know Your Distributor (KYD)’ can perform the IPV. But in case of direct applications, MFs can also rely upon the IPV performed by the scheduled commercial banks.
Existing clients, who have already undergone the KYC process, and do not intend to modify any details, can continue to transact with intermediaries as usual
Fund manager changes
Principal Mutual Fund has re-assigned fund management responsibilities for some of its schemes from December 16, 2011. From then on, Principal Large Cap Fund, Principal Personal Tax Saver Fund and Principal SMART Equity Fund will be managed by Mr Anupam Tiwari; Principal Dividend Yield Fund will be managed by Mr Dhimant Shah and Principal Retail Equity Savings Fund will be managed by Mr Rajat Jain.
Escorts Mutual Fund has appointed new fund managers for some of its schemes post the resignation of Mr Rajat Budhiraja and Mr Jagvir Singh Fuzdar; the details are as follows: Mr Anuj Jain has been appointed as the fund manager of all the debt schemes and the debt portion of equity schemes of Escorts Mutual Fund in place of Mr Rajat Budhiraja from December 1, 2011. Mr Archit Singhai has been appointed as the equity fund manager of all the equity schemes of Escorts Mutual Fund in place of Mr Jagvir Singh Fuzdar from December 12, 2011.
Changes in scheme structure and offering
ICICI Prudential Mutual Fund has stopped taking investments in ICICI Prudential Banking & PSU Debt Fund either through fresh or additional purchase or switch-ins from December 21, 2011.
IDFC Mutual Fund has altered the subscription amount of IDFC Ultra Short Term Fund. There will be no limit in the subscription amount from December 21, 2011. Also, the fund house has decided to introduce the Quarterly Dividend Option under this scheme from December 22, 2011.
Franklin Templeton Mutual Fund has changed the record date for maturity of Franklin Templeton Capital Safety Fund-5 Years Plan to December 27, 2011.
Principal Mutual Fund has changed the Minimum SIP installment amount from Rs 500 to Rs 1000 under Principal Retail Money Manager, Principal Cash Management and Principal Ultra Short Term Fund from December 26, 2011. The fund house has also changed the face value of the above three schemes along with Principal Near Term - Conservative and Moderate Plans from December 24, 2011 to Rs 1000 from Rs 10 earlier. Also, the minimum additional subscription in Principal Near Term Fund has been revised from Rs 500 to Rs 1000; and SIPs with minimum 6 installments of Rs 1000 each will be available under Principal Near Term Fund - Moderate Plan.
Exit load structure revised
Principal Mutual Fund has begun charging an exit load of 0.50% under Principal Income Fund – Short Term from December 19, 2011 if units are redeemed on or before 6 months from the date of allotment.
Birla Sun Life Mutual Fund has changed the exit load structure in Birla Sun Life Short Term Opportunities Fund. From December 26, 2011, an exit load of 2% will be charged if units are redeemed within 365 days from the date of allotment and 1% will be charged if units are redeemed after 365 days but before 730 days from allotment.
JP Morgan Mutual Fund will charge an exit load of 1% under JP Morgan India Active Bond Fund from January 2, 2012 if units are redeemed or switched out within 1 year from the date of allotment.
