The Finance Ministry plans to call a meeting of the Financial Stability and Development Council (FSDC) to set in motion common demat account for various financial instruments and uniform KYC (know your client) for the entire financial sector.

FSDC is an apex level forum of all regulators in the financial market and chaired by the Finance Minister.

“For common demat (securities in electronic form) account, the definition of security under Depositories Act needs to be widened. The Act empowers SEBI board to specify instruments as security. However, the proposed change intends to include instruments from the banking and insurance sector. This requires a meeting of all regulators of financial sector,” a senior Finance Ministry official told BusinessLine .

Needs no amendment The official said inclusion of these instruments will not require amendment in the Act, but can be done by SEBI itself.

Currently, definition of security includes equity shares, preference shares, partly paid-up shares, bonds, debentures, commercial papers, certificates of deposit, and Government Securities (G-Secs), among others.

Much better ‘co-ordination’ among various regulators is required as there are three sets of depositories — for shares and other securities governed by SEBI; Central Registry of Securitisation Asset Reconstruction and Security Interest of India for banks and National Housing Bank; and a third one is being proposed for the insurance sector.

Uniform KYC According to the official, the effort is also on to bring in uniform KYC soon. “Under the Prevention of Money Laundering Act, 2002, the Government has the power to frame rules for KYC.

It will use it to do so,” he said while adding that the plan is to use ‘Aadhar’ widely for this purpose.

Meanwhile, SEBI had in early August allowed sharing of KYC of its regulated entities with those regulated by others such as RBI, IRDA, PFRDA and FMC.

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