This will become effective on 1 May 2023. The regulators said that it should be ensured that all e-wallets are fully compliant with KYC norms as prescribed by Reserve Bank of India.
According to a bill issued by SEBI, the entity approved fund houses to accept up to USD 608 every fiscal year using e-wallets since 2017. After making KYC required for retaining e-wallets in mutual funds on May 1, 2023, industry analysts believe that the capital markets regulator’s decision will increase security and reduce the danger of fraud in mutual fund transactions.
Founders of Banksathi commented that for metro, tier 1, and Ttier 2 city customers, KYC will ensure that only authorised users have access to e-wallets, thereby boosting security and decreasing the risk of fraud. By integrating KYC to e-wallets, clients will have improved investment transparency, as they will be able to more easily trace their mutual fund holdings and transactions. After the completion of the KYC procedure, consumers will be able to invest in mutual funds using e-wallets without the burden of continuously providing physical documents.
A challenge facing tier 3, 4, 5 city customers is that they are unfamiliar with the KYC process and struggle to understand the criteria and processes involved in it. They may also not have a sufficient level of literacy in digital media, which makes it difficult to perform KYC through online platforms.
Customers that live in more remote areas and do not have access to the internet or cell phones may have a more difficult time completing the Know-Your-Customer procedure online. As a result, SEBI and the companies that supply e-wallets have a responsibility to inform users about the advantages of KYC and to simplify the process of completing KYC for customers in Tier 2 and Tier 3 locations. E-wallet service providers should also study other ways for users to complete KYC, such as the installation of kiosks or the formation of partnerships with local agents who can assist customers through the process.
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