Description

SEBI streamlines the process for voluntary and involuntary surrender of KRA registration to ensure orderly wind down of operations.

Summary

SEBI has streamlined the process for surrender of Know Your Client Registration Agency (KRA) registration for both voluntary and involuntary scenarios. The circular mandates that KRAs must have a Standard Operating Procedure (SOP) for orderly wind down of operations and transfer of KYC records to another registered KRA to ensure continuity of services.

Key Points

  • Two scenarios for KRA registration surrender: voluntary (strategic/business decision) and involuntary (financial distress/regulatory actions)
  • Critical operations include registration and modification of KYC records and maintaining interoperability among KRAs
  • Transferor KRA must transfer all KYC records to another SEBI-registered KRA (Transferee KRA) without data loss or tampering
  • SOPs must be uniform and mutually agreed upon among all KRAs
  • Model SOP provided in Annexure A for standardization

Regulatory Changes

  • Introduction of standardized process for KRA registration surrender under Regulation 13 of KYC Registration Agency Regulations, 2011
  • Mandatory establishment of Standard Operating Procedures for wind down scenarios
  • Requirement for uniform SOPs across all KRAs to ensure interoperability
  • Creation of Oversight Committee for monitoring wind down process

Compliance Requirements

  • KRAs must establish board-approved Standard Operating Procedures for surrender scenarios
  • SOPs must detail operational modalities for transfer of records, data, and documents
  • Must ensure complete transfer of client records including updates, modifications, and audit trails
  • Constitute an Oversight Committee to monitor winding down process
  • Ensure seamless client services without requiring fresh KYC
  • Maintain compliance with SEBI Act, Regulations, and Rules throughout the process

Important Dates

  • Circular dated: September 05, 2025
  • No specific implementation deadlines mentioned in the circular

Impact Assessment

The streamlined surrender process will ensure orderly exit of KRAs from the market while protecting investor interests. This reduces operational risk and ensures continuity of KYC services. The standardized approach will minimize disruption to securities market operations and maintain data integrity during KRA transitions.

Impact Justification

Affects KRA operations and processes but has limited direct market impact