Around 85 per cent of the investors in stock markets come from top 15 cities of the country. Hence, the stock market regulator wants to bring more and more rural investors into the financial market.
Sebi recently allowed its rural customers to deal in the capital market to the tune of Rs 20,000 at one go and Rs 50,000 per annum in cash.
"The present KYC norms are a hurdle but because of money laundering issues we cannot do away with them either. In rural areas, this is a bigger issue as people don't have proper documentation. Even in urban areas people find difficulty in going for KYC documentation time and again.
"Hence, we are planning to come out with a single KYC form," Sebi Whole-time Member Rajeev Kumar Agarwal said here today. He was addressing a meeting on financial distribution organised by leading industry body CII.
Noting that it makes no sense forcing people to produce their ID-cards and photographs multiple times for complying with KYC norms, he wondered if independent agencies can upload the data for particular intermediaries. "Why an investor has to go to an intermediary time and again? One should not be made to do so for KYC time and again."
Agarwal said since KYC (know your customer) norms for opening a bank account have become very difficult today, Sebi plans to allow rural people to trade in cash or simply subscribe to a mutual fund by paying cash.
"What we are planning to do is that for the cash market participants there will be only a one-page KYC plus account opening form which will be known as Saral.
"Another issue is relating to cheque or cash transaction. Considering the issues prevailing in the rural areas, you cannot do away with the cash component as not even 50 per cent of households have bank accounts," he said.
"That is why we have recently liberalised the system a bit and allowed cash transactions up to Rs 20,000 at a time and Rs 50,000 per annum," he added.
To make capital market access smoother, last Budget proposed to introduce uniform KYC norms and inter-usability of KYC records across the entire financial sector. The move can help individual investors with multiple service providers such as banks, insurance firms and mutual funds.

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