The Hindu Business Line : NSDL asks DPs to re-verify accounts every fortnight

National Securities Depository Ltd (NSDL), the country's leading depository, which has come under the SEBI scrutiny in the recent IPO scam investigation, had decided to follow stricter (Know your customer) KYC norms.

As per a new process being introduced, NSDL has directed Depository Participants (DPs) to undertake a re-verification of the identity of demat account holders, once in every 15 days, in the cases where clients hold 20 or more accounts in the same address.

Re-Verification

"We have asked the DPs to do a re-verification of the KYC norms on a continuous basis if 20 or more accounts are opened in the same address," said Mr C.B. Bhave, Chairman & Managing Director of NSDL. In SEBI's IPO investigation, it was found that people have used the common address for financing and applying for shares in various fictitious names. "We have done an analysis of the addresses in the depository system to find out whether more than 20 accounts have the same address," Mr Bhave said. "Every fortnight DPs must make an analysis of the new accounts that were opened," he said. The accounts would be frozen if the KYC documentations were not in proper order.

Proper Documentations

"At one point of time, you may find that one particular address has only 19 accounts, but later, one or 20 more accounts may get opened. So this will have to be a continuous affair," Mr Bhave said. So far NSDL has frozen about 4,000 demat accounts, after it found the documentations were not in order.

Earlier, NSDL had made PAN card compulsory from April 1, 2006 onwards for all new accounts. For all existing accounts, the investors have been asked to submit the PAN cards by September 30.

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