MF investors must ensure KYC re-validation by 30 April to avoid disruption

On or before 30 April 2023, KYC registration agencies (KRAs) must revalidate the KYC of mutual fund investors who used Aadhaar as an official valid document (OVD) for KYC prior to 1 November 2022.
This deadline has already been extended several times by the Securities and Exchange Board of India (SEBI). In accordance with its most recent circular, all existing clients (who have used Aadhaar as an OVD) must have their KYC data verified within 180 days starting on 1 November 2022, extending the cut-off date from 1 July 2022.
The present situation is that the market regulator has not yet extended the deadline, therefore the deadline of 30 April 2023 remains in effect. 
“Clients whose KYC records are not found to be valid by KRA after the validation process shall be allowed to transact in securities market only after their KYC is validated" according to SEBI initial circular on the subject from April of last year.
After the re-validation is complete, according to SEBI, the KRA must provide the investor with a unique client identifier. The client may open an account with any other intermediary using this "KRA identifier without having to go through the KYC procedure again ".
In the instance of KYC based on non-Aadhar OVD, Sebi in its April 2022 circular had specified that “the KRA shall only store such records and the same would not be validated by KRAs unless Aadhaar number is provided by the client".



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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.
Debashis Basu