SEBI seeks major changes to new KYC process

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The Securities and Exchange Board of India (Sebi) has sought major changes in the newly implemented central Know Your Customer (KYC) process. The regulator has written that several market intermediaries such as mutual funds (MFs), brokerages and even banks were facing issues adhering to the new central KYC process.

Starting August 1, the government has shifted to the central KYC process, to enable common and one-time KYC for all financial market intermediaries. Central KYC is being implemented through the Central Registry of Secularisation and Asset Reconstruction and Security Interest of India (CERSAI), an online registry promoted by the central government.

In a recent letter, the capital market regulator has demanded a slew of changes, including more time between opening a new account and making an electronic entry with the central KYC registry.

KEY SEBI DEMANDS FROM FINMIN ON KYC
Extend time-period for compliance

Make Sebi-registered know your customer (KYC) agencies a pass-through link between market intermediaries and CERSAI

Exempt existing individual clients from fresh KYC process

Use UIDAI to enable e-KYC

Allow KRAs to do KYC on behalf of mutual funds

According to the norms, every financial institution needs to file an electronic copy of a client’s KYC records with the central registry within three days of an account being opened.

In a circular in July, Sebi had mandated all market intermediaries, including brokers and MFs, to make new KYC submissions to CERSAI. Several market players made representations to Sebi, highlighting the operational difficulties under the new system.

“It is a cumbersome job, right from disclosure to verification. We have sought extension in the timeline as deadline is not sufficient to meet the requirements,” said Nilesh Shah, managing director, Kotak AMC.

To sync the new system with the earlier common KYC, Sebi has also suggested to accept KYC Registration Agencies (KRAs) as a pass-through entity between registered intermediaries and CERSAI. Under the previous KYC regime, KRAs were the most important part of the system.

To avoid duplication of work, Sebi also wants to exempt individual clients whose accounts are opened before August 1 from undergoing KYC process all again. According to Sebi, KYC details of these clients are already with the KRAs and can be used even when they approach other registered intermediary for entering into account-based relationship, Sebi said in a letter to ministry.

Sebi had allowed interportability among KRAs, to enable sharing of information among them based on client’s permanent account number (PAN). To enable online KYC, Sebi has recognition of the Unique Identification Authority of India (UIDAI). The same would leverage the Aadhaar database and ease the process of doing business, said Sebi.

Apart from this, the regulator has also asked the ministry to allow share transfer agents to do KYC on behalf of mutual funds. However, the responsibility of KYC will continue to remain with the mutual fund on whose behalf the registrar carries out the KYC, noted Sebi.

 

Source: http://www.business-standard.com/article/markets/sebi-seeks-major-changes-to-new-kyc-process-116090300579_1.html

Second instalment of FDI reforms cleared

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The Union Cabinet today approved the second instalment FDI of reforms, which the Centre has announced in June covering diverse sectors including Defence, food-processing, single brand retail and broadcasting.

The ex-post-facto approval for the reforms in the Foreign Direct Investment regime was given by the Cabinet in its meeting on Wednesday.

Under the amended rules, 100 per cent FDI with government approval is permitted for trading, including through e-commerce, in respect of food products manufactured and/or produced in India.

In Defence, foreign investment beyond 49 per cent is permitted through the approval route wherever it is likely to result in access to modern technology or for other reasons to be recorded. The state-of-the-art technology condition has been dropped.

In the broadcasting sector, the amendments allow 100 per cent FDI via the automatic route, up from 49 per cent.

To encourage investments in pharmaceuticals, the amendments allow 74 per cent FDI under the automatic route in the brownfield (existing projects) segment. Earlier, all FDI in brownfield projects had to come in through the government approval route.

Similarly, in the civil aviation sector, 100 per cent FDI under the automatic route has been allowed in brownfield projects as against 49 per cent earlier.

Local sourcing norms have been relaxed up to three years, with government approval for entities undertaking single brand retail trading of products having state-of-the-art and cutting edge technology. Thereafter, sourcing norms would be applicable.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/second-instalment-of-fdi-reforms-cleared/article9057070.ece

Govt allows Aadhaar e-KYC for new mobile connections

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Forget the bulky paperwork, you can now apply, validate and activate new pre-paid and post-paid mobile connections using your Aadhaar card and fingerprint at the point of sale.

 

The government today issued e-KYC guidelines to make the online process of application and authentication faster and simpler for subscribers. In contrast to the existing document-based process, the move is intended to cut down time for SIM activation as KYC is verified instantly.

 

In e-KYC, a customer through her Aadhaar number and biometrics will online authorise UIDAI to provide demographic details such as name, address, date of birth and gender, along with the digitally-signed photograph, to the mobile operator.

 

“Digitally-signed electronic KYC data provided by UIDAI is machine readable, making it possible for licensees to directly store it as customer record in their database for the purpose of issuing a mobile connection,” a DoT notification said. COAI Director General Rajan Mathews felt that the move will be helpful for all stakeholders as it simplifies activation, eases verification process and enhances security.

 

“Earlier, the entire verification process would last 8-10 hours and it will now be greatly reduced,” he hoped. Bharti Airtel plans to start rolling out Aadhaar-based e-KYC solutions this week, MD and CEO (India and South Asia) Gopal Vittal said.

 

Vodafone India termed the e-KYC solution as “an instant, secure and green mobile subscriber verification project” and said all stakeholders will benefit from it. Customers will soon be able to walk in with their Aadhaar card in any of the Vodafone stores and walk out connected within minutes, the company statement read.

 

“For the consumer, instant activation means better experience and security of personal confidential information. For Vodafone, it will improve quality of sales as well as regulatory compliance. For the regulator, it not only means a green initiative, but hassle-free governance and accurate audit results,” said Sunil Sood, MD and CEO, Vodafone India.

 

According to Hemant Joshi, Partner, Deloitte Haskins & Sells, the move will bring down the cost of subscriber acquisition significantly as telecom companies will not have to spend on physical transportation of forms, verification, scanning and storage. “Also, it would help easier compliance and reduction in litigation on account of audit carried out by term cell,” Joshi said.

Source: http://www.moneycontrol.com/news/business/govt-allows-aadhaar-e-kyc-for-new-mobile-connections_7288301.html

Commerce ministry eases rules to promote exports

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The commerce ministry has relaxed certain norms to promote outbound shipments and manufactured products from export-oriented units (EoUs), software technology parks of India (STPIs) and electronic hardware technology parks (EHTPs).

The norm of mandatory warehousing requirement for EoUs and software and electronic hardware technology parks has been done away with.

The Directorate General of Foreign Trade (DGFT) has also eased rules for the existing EHTP and STP units to avail tax exemptions in the case of conversion or merger of EoU and vice versa.

In a notification, the department said an EoU, which is into agriculture, aquaculture, horticulture and poultry, might be permitted to remove specified goods in connection with its activities for use “outside the premises of the unit”.

Earlier, it was allowed only for outside the bonded area. DGFT has said this in a notification, amending the foreign trade policy (2015-20).

The EoU scheme, which was introduced in December 1980, had allowed manufacturing units in export processing zones to enjoy 100 per cent tax exemption on profits from overseas sale and duty-free import of raw material.

As the scheme had a sunset clause, the tax benefits were stopped from March 2010. This scheme was utilised by small and medium enterprises to set up their units for the purpose of exports.

Later, a committee had suggested steps, including tax incentives, to revive these units.

The decision takes on significance as the country’s exports, after rising for the first time in 19 months in June, shrank again in July. It contracted 6.84 per cent due to the decline in shipments of engineering goods and petroleum products.

Source: http://www.business-standard.com/article/economy-policy/commerce-min-eases-rules-to-promote-exports-116081700050_1.html

India rises to 66th rank in innovation

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India had been faring poorly for several reasons over the years, largely related to poor infrastructure, performance in education, intellectual property and so on.

Reversing a trend of declining rankings every year, India rose by 15 positions to become the 66th most innovative nation in the world. India’s neighbour China also improved its ranking slightly and broke into the club of 25 top innovative nations in the world.

The Global Innovation Index has been created and reported every year by the Paris-based business school Insead, Cornell University and the World Intellectual Property Organisation, a United Nations agency. The Gobal Innovation Index is positioned as resource for policy makers, to identify areas of possible improvement in innovation. It is based on 82 variables across seven areas, grouped into two divisions — inputs and outputs for innovation.

India had been faring poorly for several reasons over the years, largely related to poor infrastructure, performance in education, intellectual property and so on.

This year it has done well largely based on good performances on information technology services exports and creative goods exports.

Source : http://economictimes.indiatimes.com/articleshow/53716047.cms

India giving World Bank all evidence of improved ease of doing business

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India is providing detailed evidence to the World Bank on ease of doing business as it seeks to break into the top 100 countries on the bank’s index from its current rank of 130.

Officials said logs of construction permits, containerised cargo movement at ports and setting up of a company are being provided to World Bank as part of the Narendra Modi government’s efforts to ensure it does not miss any point to score to improve India’s rank.

World Bank officials had a few queries for the Department of Industrial Policy & Promotion (DIPP) when they met on August 1 after completing field inspection and verification of claims over the 14 parameters on ease of doing business.

While the World Bank does not share its findings, one observation made by its team was that people were carrying paperwork to the offices of the Employees’ Provident Fund Organisation even as registration was made free of all physical touch-points. “We clarified that it is only for claims that one needs to file the papers,” said a senior DIPP official, who did not wish to be identified.

Besides, DIPP is now gathering its own evidence for cases where it feels respondents have not have kept in mind the assumptions made by the World Bank study.

“In case of construction permits the study is limited to warehouses or buildings on the outskirts or setting up of a company parameter is only for domestic enterprises and not how long it takes for a foreign entity,” the official said.

DIPP is taking a proactive approach to provide evidence on its part even after the field investigations have been wrapped by the World Bank team. Final rankings will be announced in October. The ranking considers business environment in Delhi and Mumbai. India compares unfavourably even with countries such as Mexico, which is ranked 38, and Russia, which is at 51. Prime Minister Modi has set a target for India to be in the top 50 in three years.

Specific areas DIPP has targeted are starting business, insolvency procedures, construction permits, ease of trade across borders and electricity connections. According to the department, total number of days required to start a business has been reduced to 12 from 29 in the past year. A team of researchers spent two weeks in Delhi and Mumbai talking to actual users and stakeholders to study and verify implementation of reforms, officials said.

Source : http://economictimes.indiatimes.com/articleshow/53716006.cms

CBDT signs bilateral APAs with Japanese trading firm arm

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The Central Board of Direct Taxes has signed bilateral advance pricing agreements with Indian arm of a Japanese trading company, a move that will help bring down transfer pricing disputes relating to intra-group transactions.

“The Central Board of Direct Taxes (CBDT) entered into a bilateral advance pricing agreement (APA) on August 2, 2016, with Indian subsidiary of a Japanese trading company. This is the first bilateral advance pricing agreement with a Japanese company having a rollback provision in it,” a finance ministry statement said today.
Overall, it is fourth bilateral APA signed by CBDT.

Signing of the pact is an important step towards ascertaining certainty in transfer pricing matters of MNC cases and dispute resolution, the statement noted.

The APA scheme was introduced in the Income-Tax Act in 2012 and the rollback provision in 2014.

The scheme intends to provide certainty to taxpayers in the domain of transfer pricing by specifying methods of pricing and setting the prices of international transactions in advance.

Its progress strengthens the government’s mission of fostering a non-adversarial tax regime, the statement said.

CBDT expects more APAs to be concluded and signed in the near future.

An APA, usually for multiple years, is signed between a taxpayer and the tax authority (CBDT in India) on an appropriate transfer pricing methodology for determining the price and ensuing taxes on intra-group overseas transactions.

Source: http://www.business-standard.com/article/pti-stories/cbdt-signs-bilateral-apas-with-japanese-trading-firm-arm-116080400879_1.html