The growth in the number of demat accounts, an indicator of retail investors taking to financial investments, remained in the slow lane, while jan dhan account openings in banks and aadhar enrolments have seen steady expansion in the past two years.
There were over only 2.55 crore investors accounts (demat accounts) registered with national depositories NSDL and CDSL as on April 30, 2016 compared with more than 22 crore bank accounts opened under jan dhan yojana and 101.39 crore aadhar numbers issued so far.
Permanent account numbers or PAN cards allotted till February 2016 are more than 24.37 crore.
The cumbersome KYC or know your client norms have been one of the main reasons for slow growth in demat account openings. The KYC norms are now is being made easier through electronic verification and digital KYC using applicant’s biometrics.
Neil Parikh, chairman and chief executive officer of PPFAS Asset Management, said, “KYC has been a big complaint historically but six months from now it won’t matter so much.”
In the past, KYC process had been lengthy and cumbersome with as many as 60 signatures required from Indian nationals and around 100 signatures in the case of non-resident Indians (NRIs) for account opening for portfolio management services. But the process of KYC is being made easier and hassle-free now.
With Sebi allowing aadhar-based KYC, one can open an account without a signature and aadhar-PAN number combination is considered a valid proof for investment of up to Rs 50,000 in mutual funds.
Brokers are now going beyond electronic KYC and are launching digital-KYC where demat account is opened through digital signature using biometric devices.
Angel Broking has launched a new demat account opening process. Under this, the customer's thumb prints are used as his e-signature that is linked to the applicant’s aadhar card issued by the unique identification authority of India.
Its D-KYC procedure requires only a one-time OTP generation and authentication, unlike the E-KYC systems that need around 5-6 OTPs.
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