At a press conference on government measures to revive the Indian economy, Finance Minister Nirmala Sitharaman announced some changes in regulations to increase participation of investors-both domestic and foreign. While the major announcement was the withdrawal of enhanced surcharged imposed by the government during Budget 2019, Aadhaar-based KYC was permitted to be used for opening demat accounts and investing in mutual funds.
In this regard, necessary amendments to be made to the Prevention of Money Laundering Act will be issued soon.
The change will make know-your-customer (KYC) procedure for new entrants to mutual fund investments, easy.
Last year, the Supreme Court had barred forcible use of Aadhaar, except for availing select government subsidies and for pensions. Fund houses were forced to rely on a paper-based mode of KYC which is time-consuming for the customers as well as businesses.
Aadhaar based KYC or e-KYC allows using of OTP to verify the details from the Aadhaar with those provided by the customers in minutes.
The government also said that the Depository Receipt Scheme 2014 is expected to be operationalised soon by SEBI. "This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR)," Sitharaman said.