Budget 2014: One KYC, one Demat across the finance sector; Govt makes it easy for you & me

MUMBAI: Investors may be able to access details of their investments across a wide range of instruments, not just shares and mutual funds, but potentially bank and post office deposits and insurance products from a single demat account. Further Know Your Customer (KYC) norms have also been eased, which means KYC verification by one organisation will be accepted by another.
The finance minister, in the Union Budget on Thursday, expressed the government’s commitment to the concept of one single operating demat account as well as uniform KYC norms and interusability of KYC records across the entire financial sector, in order to encourage wider participation in Indian financial markets.

“The uniform KYC norms and inter-usability of KYC records will encourage financial sector consumers to participate in Indian capital markets. The single demat account will make life of consumers easier as one can track all investments through a single window,” said D Kannan, MD at Kotak Securities.

The sub-committee of the Financial Stability and Development Council, or FSDC, a forum of regulators monitoring financial stability and inter-regulatory co-ordination, headed by the Reserve Bank of India governor, has been working on this initiative after former finance minister P Chidambaram announced that the government was working towards a single demat account holding details of all financial investments in the interim Budget in February.
Regulators are also seeking legal opinion on whether there is a need to clarify the definition of securities in the Depository Act to cover financial instruments like fixed deposits, insurance and provident fund schemes. “A single demat account will ensure safety of various investments such as bank deposits, post office deposits, mutual fund investments, etc and will eliminate fraudulent activities from the market. It will also help consumers channelise his or her investments,” said A Balasubramanian, CEO, Birla Sun Life AMC, which manages assets of over Rs 98,000 crore. The government through these moves aims to increase financial savings.

“The common demat account will revolutionise financial markets like the way dematerialisation did many years back,” said Anup Bagchi, MD and CEO, ICICI Securities.