Mumbai: The inertia to comply with the recent ‘know your distributor’ (KYD) norms introduced by AMFI is not only from domestic distributors. Asset management companies, financial services arms of corporate distributors and IFAs present in areas like Dubai, Singapore, and London are also found to have not complied with KYD norms so far. Spread across 30 foreign countries, a majority of these distributors are channelizing sizeable money in the Indian mutual fund market, according to fund officials.
According to AMFI data, 27 distributors including IFAs based out of Dubai are not KYD compliant. Dubai has 28 registered ARN holders.
“Either the distributors have to travel or someone from CAMS end has to go there. These issues were not clear at the time of introducing KYD. These distributors are bringing sizeable business from Indian NRI community. The deadline may get extended till March but AMFI board has to take a decision on this. A bulk of the business comes from Singapore, Gulf and London,” said one person familiar with the development.
An official from CAMS however said that distributors themselves need to fly to India in order to complete the procedure, especially for the biometric requirement. The 28 February 2011 deadline set by AMFI will be a challenge as less than 15,000 distributors are KYD compliant yet. Till 11 January 2011, some 12,000 ARN holders were KYD compliant.
Going by the slow pace of KYD processing, the AMFI committee is also believed to be proposing an extension of deadline till March to the AMFI board members and SEBI. The procedure entails additional cost for AMCs and distributors who are present abroad since they have to visit India to complete the formalities. The trade body AMFI in consultation with its board members is likely to reach a consensus on this issue in the days ahead.
Computer Age Management Services (CAMS), the agency entrusted to handle KYD has speeded up the process by activating additional points of service (POS) across the country; in addition to its existing 60 POS. Cafemutual had reported previously that only 10% of the distributors had completed the KYD procedure till the end of December 2010.