Description

SEBI settlement order for KFin Technologies Limited regarding violations in share dematerialization due diligence and folio marking requirements.

Summary

SEBI issued Settlement Order No. SO/JS/YK/2025-26/8035 against KFin Technologies Limited (Registration No. INR000000221) for violations identified during inspection from February 19-23, 2024 covering the period February 1, 2023 to November 30, 2023.

Key Points

  • KFin Technologies failed to exercise due diligence while processing share dematerialization requests
  • Failed to mark 17,98,534 folios lacking PAN details for enhanced due diligence
  • Failed to mark 17,75,683 folios lacking bank account details for enhanced due diligence
  • Settlement application filed on August 19, 2024 following Show Cause Notice dated July 8, 2024
  • New Adjudicating Officer appointed on April 9, 2025 due to superannuation of previous officer

Regulatory Changes

No new regulatory changes introduced - enforcement of existing RTA Regulations and SEBI circulars regarding due diligence requirements.

Compliance Requirements

  • Registrar and Transfer Agents must exercise proper due diligence in share dematerialization processes
  • Folios without PAN or bank account details must be marked for enhanced due diligence as per SEBI Circular SEBI/HO/MIRSD/DOP1/CIR/P/2018/73 and Master Circular SEBI/HO/MIRSD/POD-1/P/CIR/2023/70
  • RTAs must maintain compliance with clause 3 of Schedule III of RTA Regulations read with regulation 13

Important Dates

  • Inspection Period: February 1, 2023 to November 30, 2023
  • Inspection Conducted: February 19-23, 2024
  • Show Cause Notice: July 8, 2024
  • Settlement Application Filed: August 19, 2024
  • New AO Appointment: April 9, 2025

Impact Assessment

Medium impact as it involves a major RTA with significant folio handling responsibilities. The settlement indicates resolved compliance issues but highlights importance of proper due diligence procedures for share dematerialization and investor record maintenance across the RTA industry.

Impact Justification

Settlement order affects a major RTA but represents resolved compliance issues rather than ongoing market disruption