Out of almost 11 crore investors under Sebi's regulatory purview, roughly 1.3 crore accounts are "on hold," meaning these investors cannot transact in stocks, mutual funds, or commodities using these KYCs, as these do not comply with Sebi rules for a variety of reasons, according to KYC registration entities, or KRAs as they are known in the market. In response to investor concerns about whether their KYCs, even if completed correctly, would let them to keep investing in stocks, commodities, and mutual funds (MFs), the five KRAs collaborated to issue a comprehensive statement.
Reclassifying KYCs under different categories became necessary after it was discovered that many investors' KYCs still lacked the links to their PAN and Aadhar and had not been updated. Many of these KYCs were completed with papers like as bank account statements, utility bills (phone and electricity), and other documents that Sebi no longer accepts as acceptable for KYC compliance.
As of April 1, each investor's KYC has been divided into three categories by KRAs under the revised KYC compliance process: validated, registered, and on hold. According to a KRA officer, the investors' PAN, Aadhaar, email address, and cellphone number were taken into consideration when classifying them.
Investors can proceed with their investing procedure if their KYCs have been confirmed. Those who have completed their KYCs online can keep investing, but if they want to create a new demat account or invest in another fund house, they will have to go through the re-KYC procedure.
Investors who completed KYCs using bank statements, utility bills, or other comparable documentation are no longer able to make investments; these KYCs are currently on hold. Additionally, they wouldn't be able to take money out unless they updated their KYC records.
According to a KRAs statement, about 7.9 crore, or 73%, of the approximately 11 crore investors have valid KYC. About 1.6 crore people have registered KYCs; these investors now have restricted access to the investment market, and 12% of the total cannot access their MF folios or demat accounts.
According to the statement, "Investors can verify their KYC status through any of the KRA websites under 'KYC inquiry and initiate action." By visiting the websites of their brokers and mutual funds, investors may also update their KYCs. Additionally, any changes made to the KYC would affect all of their investments, including stocks, mutual funds, and commodities. It is not necessary for investors to update their KYC for every broker and fund house where they have folios or accounts.
