Securities and Exchange Board of India (
SEBI
) chairperson Madhabi Puri Buch has underscored the critical importance of stringent Know Your Customer (KYC) procedures in the financial services sector. Talking to media at the launch of India’s first dedicated website for passive mutual funds, she emphasized that the
KYC
Registration Authority (KRA) system is indispensable for safeguarding the stock market in the country.
Buch was speaking at an event organised by NSE in Mumbai.
Drawing a parallel with the regulatory actions taken against
Paytm
Payments Bank earlier this year, Buch expressed concerns about the potential risks of compromising KYC standards. She asserted that the absence of a KRA-like system in the banking sector allowed issues at Paytm to remain contained, but a similar situation in the stock market could have far-reaching consequences.
No plan to dilute overall KYC framework
“We will not allow a Paytm type contamination in our market. In the banking system there is no KRA type system; so, a problem with Paytm stays within Paytm. But if we allow someone like Paytm to contaminate the whole market and there is no KRA…how can we allow that,” Puri said. She clarified that while there is ongoing discussion about simplifying KYC for mutual fund investors, there is no intention to dilute the overall KYC framework.
Buch’s remarks highlight SEBI’s unwavering commitment to maintaining the integrity of the stock market by ensuring that all market participants adhere to the highest levels of KYC compliance.
