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Securities and Exchange Board of India
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CIRCULAR
CIR/MIRSD/29/2016 January 22, 2016 1. All Recognized Stock Exchanges
2. Stock Brokers through Recognized Stock Exchanges
3. All recognised Depositories
4. Depository Participants through Depositories
5. Association of Mutual Funds in India
6. Mutual funds through AMFI
7. Portfolio Managers
8. KYC Registration Agencies (KRAs)
9. Alternative Investment Funds (AIFs)
10. Collective Investment Schemes (CIS)
11. Custodians
Dear Sir/Madam,
Sub: Know Your Client Requirements - Clarification on voluntary adaptation of
Aadhaar based e-KYC process
1. The Hon'ble Supreme Court, in Writ Petition (Civi l) No. 494 of 2012 in the matter of
Justice K.S.Puttaswamy (Retd.) & Another vs Union of Ind ia & Others, vide order
dated August 11, 2015 and October 15, 2015 directed th at the usage of the
Aadhaar card as issued by the Unique Identification Auth ority of India (UIDAI) is
voluntary. In view of the said orders, the usage of A adhaar card is optional and
purely on a voluntary basis, subject to the final judgm ent of the Hon’ble Supreme
Court in the aforesaid petition.
2. SEBI circular dated October 8, 2013, enables Aadhaar based e-KYC service
offered by UIDAI for KYC verification on authorisatio n by the client to the
intermediary on a voluntary basis. Clarification on cer tain operational aspects of
the said circular is provided at Annexure A.
3. It may be noted that the provisions laid down unde r the Prevention of Money-
Laundering Act, 2002, Prevention of Money-Laundering (Maintenance of Records)
Rules, 2005, SEBI Master Circular on Anti Money Launde ring (AML) dated
December 31, 2010 and SEBI Circular on AML dated March 12, 2014 and relevant
KYC circulars issued from time to time shall continue to remain applicable.
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Securities and Exchange Board of India
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4. This clarificatory circular is issued in exercise of the p owers conferred under
Section 11(1) of the Securities and Exchange Board of I ndia Act, 1992 to protect
the interests of investors in securities and to promote t he development of and to
regulate the securities market.
Yours faithfully,
D Rajesh Kumar
Deputy General Manager 022-26449242
Email: rajeshkd@sebi.gov.in
Encl: Annexure A – Clarification on voluntary adaptation of Aadhaar based e-KYC
process
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Securities and Exchange Board of India
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Annexure - A
Clarification on voluntary adaptation of Aadhaar ba sed e-KYC process
SEBI vide circular dated October 8, 2013, enabled Aadh aar based e-KYC service offered
by UIDAI for KYC verification.
Intermediaries have sought clarifications from SEBI on certain operational aspects of the
same.
It is clarified that for accessing the details enabling cli ent identification and authentication
from UIDAI based on client authorisation, on voluntary basis, intermediaries who utilize
the services of KYC Service Agencies (KSAs) would be regist ered as KYC User Agencies
(KUA) with UIDAI.
1. For entering into account based relationship, the cl ient may provide the following
information to the intermediary: i. Name
ii. Aadhaar number
iii. Permanent Account Number (PAN)
2. The above information can be provided by the clien t electronically including through
any web enabled device.
3. The intermediary shall perform verification of th e client with UIDAI through biometric
authentication (fingerprint or iris scanning). Mutual F unds can also perform verification
of the client with UIDAI through One Time password (OT P) received on client’s mobile
number or on e-mail address registered with UIDAI prov ided, the amount invested by
the client does not exceed Rs. 50,000 per financial year per Mutual Fund and payment
for the same is made through electronic transfer from the client’s bank account
registered with that Mutual Fund.
4. PAN of such client is to be verified from the income tax website.
5. After due validation of Aadhaar number provided by the client, the intermediary (acting
as KUA) shall receive the KYC information about the cli ent from UIDAI through KSA.
6. The information downloaded from UIDAI shall be con sidered as sufficient information
for the purpose of KYC verification. The intermediary shall upload this KYC
information on the KRA system in terms of KRA Regulat ions.
7. In case material difference is observed either in th e name (as observed in the PAN
vis-a-vis Aadhaar) or photograph in Aadhaar is not clea r, the intermediary shall carry
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Securities and Exchange Board of India
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out additional due diligence and maintain a record of the additional documents sought
pursuant to such due diligence.
8. The records of KYC information so received shall be maintained by the intermediary
as per the SEBI Act, Regulations and various circulars issue d thereunder.
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