Demat, trading accounts should be KYC compliant by 31 December 2021

The Securities and Exchange Board of India (Sebi) has extended the deadline for making demat and trading accounts KYC-compliant to December 31, 2021, from September 30, 2021, according to The Economic Times.
 
The original deadline was July 31, 2021, which was extended to September 30, 2021 due to the Covid-19 pandemic. This is the second time that the deadline has been extended.
 
As per the circular issued by Sebi in April 2021, the depositories, i.e., NSDL and Central Depository Services Ltd (CDSL) are required to ensure that six important KYC attributes are updated in the existing demat, trading accounts.
 
A demat, trading account holder is required to update the following KYC attributes:
 
a) Name
b) Address
c) PAN
d) Valid mobile number
e) Valid email ID
f) Income range
 
Further, the above-mentioned six KYC attributes are mandatory for new accounts opened on or after August 1, 2021.
 
If the deadline had not been extended and the KYC attributes were not complied with, then the account would have become deactivated. Further, an individual would not be able to trade in the stock market.
 
Even if an individual buys shares of a particular company, these shares could not have been transferred to his/her account, till the time KYC attributes were updated and verified.
 
Demat account holders should keep in mind that mobile number and email ID for KYC compliance have to be verified. Till the time mobile number and email ID are not verified, the demat account will remain under 'Pending for Activation'. Stock brokers will not activate the demat account till the time mobile number and email ID are verified. This is done so as to ensure that timely communications can be sent to the investor.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder