February 10th , 2011
By Bala Krishnan
How many details do statutory authorities need to establish an identity? Going by the current scenario, the list is unending... And soon we will all be confronted with another ‘Useless Identity Document’
A few years back, I started a systematic investment plan (SIP) for my children. My permanent account number (PAN) card, some address proof, etc, was all that was required. Now, my son is nearing 18 years of age. The money that is lying in his mutual fund account gets orphaned on this date. It can be many days before he can utilise it and I as the guardian have no control over it now! A few months ago, the registrar of the mutual fund wrote to me seeking the details of the bank account I planned to open for my son; his signature duly attested by a banker; his PAN card and his address proof.
There is a need to submit ‘proof of old bank details’ which is marked with an asterisk. The asterisk explains that it should be a cancelled original cheque leaf (with the name and account number)/bank passbook or bank account statement (certified by the bank manager)/letter from the bank for the new bank account/passbook. The PAN card is a tough hurdle. I did apply for a PAN card for my son a couple of years back, but the agency for the card issuance refused to supply one. Their logic was strange: a PAN card is not normally issued to a minor. This was nonsense, considering that my Marwari and Gujarati friends create income-tax files for newborns and pump income in their names from age one so that they can build ‘capital’ in a tax-efficient way. Finally, after a slanging match, they issued a PAN card for my son, with no photograph and with my signature!
Now, there will be a long wait. I have to get a PAN card issued for my son. And I cannot start the process until my son is 18 years old. Then, I will have to have another battle with my banker. He will want ‘address proof’ for my son. I have been a nomad for most of my life and this is a tough ask. Luckily, not having full-time employment has its advantages. I spent many man-days and got a ration card with the address where I am residing currently. Using that as the base, I managed to get passports for my children. The bank issue is sorted out, hopefully. This whole process can take quite some time. In the meanwhile, the money is frozen. I also do not understand about the ‘proof of old bank details’. At that point in time, none was asked for. Everything was linked to my account. The account was sold to me by HDFC Bank through their ‘Relationship Manager’, who is no longer with the organisation. So, no service from them, while the Bank will continue to amass the trail commission on these instruments. This sure beats working for the Government of India.
The Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI) have carried the know your customer (KYC) norms to ridiculous extremes. If one has a bank account, why bother with anything else? SEBI supervises the stock exchanges, home to the most manipulative trade practices. SEBI also ‘compounds’ offences with some token fines. None of the vanishing companies has been caught—or punished—so far. According to reports, indicted players like Ketan Parekh are supposed to be operating merrily. The regulator is behaving like the dog that chases the moving car. Once it catches up with the car, the dog does not know what to do.
These KYC norms are impractical and are meant to harass the mutual fund industry and investors. The insurance industry does not seem to care for these norms. All that the Life Insurance Corporation of India wanted from my son was a bank-attested specimen signature and a nomination form. Soon, we will all be confronted with another ‘Useless Identity Document’. The Unique Identification (UID) project would have been great if it were a single requirement. But it is yet another requirement. As I said, I have been a nomad. When I switch residence, I will have to communicate these amended details to a dozen or more places! Maybe there is scope for a broker to offer his/her services for effecting ‘change of addresses’. With mobility of jobs being so high, there surely is a huge market for such a service.
A few years back, I started a systematic investment plan (SIP) for my children. My permanent account number (PAN) card, some address proof, etc, was all that was required. Now, my son is nearing 18 years of age. The money that is lying in his mutual fund account gets orphaned on this date. It can be many days before he can utilise it and I as the guardian have no control over it now! A few months ago, the registrar of the mutual fund wrote to me seeking the details of the bank account I planned to open for my son; his signature duly attested by a banker; his PAN card and his address proof.
There is a need to submit ‘proof of old bank details’ which is marked with an asterisk. The asterisk explains that it should be a cancelled original cheque leaf (with the name and account number)/bank passbook or bank account statement (certified by the bank manager)/letter from the bank for the new bank account/passbook. The PAN card is a tough hurdle. I did apply for a PAN card for my son a couple of years back, but the agency for the card issuance refused to supply one. Their logic was strange: a PAN card is not normally issued to a minor. This was nonsense, considering that my Marwari and Gujarati friends create income-tax files for newborns and pump income in their names from age one so that they can build ‘capital’ in a tax-efficient way. Finally, after a slanging match, they issued a PAN card for my son, with no photograph and with my signature!
Now, there will be a long wait. I have to get a PAN card issued for my son. And I cannot start the process until my son is 18 years old. Then, I will have to have another battle with my banker. He will want ‘address proof’ for my son. I have been a nomad for most of my life and this is a tough ask. Luckily, not having full-time employment has its advantages. I spent many man-days and got a ration card with the address where I am residing currently. Using that as the base, I managed to get passports for my children. The bank issue is sorted out, hopefully. This whole process can take quite some time. In the meanwhile, the money is frozen. I also do not understand about the ‘proof of old bank details’. At that point in time, none was asked for. Everything was linked to my account. The account was sold to me by HDFC Bank through their ‘Relationship Manager’, who is no longer with the organisation. So, no service from them, while the Bank will continue to amass the trail commission on these instruments. This sure beats working for the Government of India.
The Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI) have carried the know your customer (KYC) norms to ridiculous extremes. If one has a bank account, why bother with anything else? SEBI supervises the stock exchanges, home to the most manipulative trade practices. SEBI also ‘compounds’ offences with some token fines. None of the vanishing companies has been caught—or punished—so far. According to reports, indicted players like Ketan Parekh are supposed to be operating merrily. The regulator is behaving like the dog that chases the moving car. Once it catches up with the car, the dog does not know what to do.
These KYC norms are impractical and are meant to harass the mutual fund industry and investors. The insurance industry does not seem to care for these norms. All that the Life Insurance Corporation of India wanted from my son was a bank-attested specimen signature and a nomination form. Soon, we will all be confronted with another ‘Useless Identity Document’. The Unique Identification (UID) project would have been great if it were a single requirement. But it is yet another requirement. As I said, I have been a nomad. When I switch residence, I will have to communicate these amended details to a dozen or more places! Maybe there is scope for a broker to offer his/her services for effecting ‘change of addresses’. With mobility of jobs being so high, there surely is a huge market for such a service.
