In a significant move to enhance transparency and investor awareness, the Securities and Exchange Board of India (SEBI) has issued a circular dated May 6, 2025, mandating all Know Your Client (KYC) Registration Agencies (KRAs) to prominently publish an Investor Charter on their websites and at their offices. This step is intended to ensure that investors are well-informed about their rights, the role of KRAs, and the processes involved in availing KYC-related services in the securities market.
What Is the Investor Charter for KRAs?
The Investor Charter is a standardized document developed by SEBI to provide clear and concise information to investors interacting with KRAs. It covers several essential aspects, including:
- Services Provided to Investors: Clarifying the scope of KRA operations, such as maintaining KYC records, processing investor service requests, and facilitating updates in client information.
- Rights of Investors: Educating investors about their entitlements, such as timely processing of requests, access to grievance redressal mechanisms, and data privacy.
- Activities of KRAs: Explaining the role KRAs play in the KYC process across the financial ecosystem, acting as intermediaries between investors and financial market entities.
- Dos and Don’ts for Investors: Offering practical guidance to investors on how to ensure a smooth KYC process, such as submitting correct documentation, verifying updates, and protecting personal information.
- Grievance Redressal Mechanism: Outlining the steps for addressing any issues or complaints, including contact details and escalation protocols.
Key Compliance Requirements for KRAs
To ensure that this Charter reaches and benefits the investor community effectively, SEBI has laid out specific obligations for KRAs:
- Website Publication: KRAs must publish the Investor Charter on their official websites. This ensures that the information is readily accessible to all investors at any time.
- Email Communication: Dissemination through email is required to directly reach existing and new investors, reinforcing SEBI’s commitment to proactive investor engagement.
- Physical Display: KRAs are instructed to display the Charter prominently in their office premises, ensuring visibility to walk-in clients.
These new disclosure obligations are over and above the existing regulatory requirements that KRAs are already mandated to follow under SEBI norms.
Why This Matters
KYC is a fundamental component of the securities market framework. Investors often engage with multiple intermediaries and rely on KRAs to maintain accurate, up-to-date, and secure records. Despite this, many investors remain unaware of their rights and the support mechanisms available to them. By enforcing the publication of the Investor Charter, SEBI aims to bridge this information gap and instill greater trust in the regulatory system.
Conclusion
SEBI’s latest directive is another step toward fostering a transparent and investor-friendly environment in India’s capital markets. It not only strengthens regulatory compliance but also empowers investors by equipping them with the information they need to interact confidently with KRAs. As the circular comes into immediate effect, investors can expect better access to key service-related information and a clearer understanding of their entitlements in the KYC process.
