Sebi Drafts Exit Blueprint for KYC Agencies: Ensures Investor Data Safety

Sebi has introduced a draft framework for the structured exit of KYC registration agencies. The framework outlines processes for both voluntary and involuntary shutdowns, ensuring continuity of services and safeguarding investor data. The regulator seeks public comments until May 20, 2025.

The Securities and Exchange Board of India (Sebi) released a draft framework outlining the structured exit process for KYC registration agencies (KRAs), aiming to protect investor data in the event of agency closures.

KRAs play a critical role in the securities market by acting as repositories of KYC records. Sebi emphasized the need for an organized transition mechanism for KRAs, ensuring service continuity and smooth activity transfer to a successor entity amid insolvency, cessation, or regulatory revocation scenarios.

Sebi invited public feedback on the draft until May 20, 2025. The framework mandates that KRAs prepare for potential wind-down scenarios by identifying key operations like KYC registration and modifications, establishing a standard operating procedure for data migration, and forming a regulatory oversight committee to manage the process.

(With inputs from agencies.)