Daijiworld Media Network – New Delhi

New Delhi, Sep 6: The Securities and Exchange Board of India (SEBI) on Friday rolled out a framework to streamline the surrender process of Know Your Client Registration Agencies (KRAs), ensuring investor interests are safeguarded during voluntary or involuntary exits.

The regulator said the new mechanism is aimed at managing orderly winding down of KRAs, whether due to business decisions, financial distress, or regulatory action.

According to the circular, KRAs giving up their registration must transfer all KYC records — including modifications and audit trails — to another SEBI-registered KRA, ensuring investors do not need to redo their KYC. The agencies are also required to maintain interoperability and portability of investor records.

The framework mandates each KRA to have a board-approved Standard Operating Procedure (SOP) to handle winding down, covering record transfer, settlement of obligations, and data protection. An oversight committee must also be formed to monitor the entire process.

Strict timelines have been prescribed: within seven days of board approval, SEBI must be informed; stakeholders must be notified within 14 days; data migration and system deactivation must be completed in 60 days; and audits and closure should follow within 75 days. A compliance report confirming completion must be submitted to SEBI within 90 days.

Additionally, KRAs must extend investor support desks for 12 months after SEBI’s approval of surrender. In cases of voluntary exits, public notices are required, while in involuntary exits, SEBI may appoint a temporary administrator or nominate an acquirer KRA to protect market stability.

The regulator further stressed that KRAs must remain fully compliant with SEBI rules, the Prevention of Money Laundering framework, and all other applicable laws during the winding-down process.