The Securities and Exchange Board of India (Sebi) is planning identification of stock market investors through their Aadhaar numbers. In its annual report for 2016-17, Chairman Ajay Tyagi said ?Sebi will continue to strengthen market supervision through various steps such as Aadhaar-based identification of investors, effective market surveillance and monitoring of compliances by regulated entities.?
The move is in line with the government agenda of making Aadhaar mandatory for opening bank accounts, filing tax returns as well as for any financial transaction of ~50,000 and above. The government in Budget 2017-18 has already mandated linking of the Aadhaar number with the Permanent Account Number (PAN) to avoid creation of multiple accounts for evasion of taxes.
In the annual report, Sebi said it was working on linking Aadhaar with individual demat accounts.
Market regulator Securities and Exchange Board of India wants to make Aadhaar card compulsory as part of the recently-amended Prevention of Money Laundering (Maintenance of Record) rules in order to crack down on those using the stock market to convert black money.
Securities and Exchange Board of India (SEBI) has asked the key Indian domestic indices-BSE Sensex and NSE Nifty that The existing clients will have to submit their Aadhaar details by December 31, 2017 whereas the new clients have to submit it within six months from opening their demat accounts.
In the case of failure to submit the documents within the aforesaid time limit, the account shall cease to be operational till the time Aadhaar number is submitted by the client.
Until now, the permanent account number (PAN) is the only document needed to trade. But the issue of multiple PANs and fake demat accounts have forced the regulator take this decision. In the recent past, fake PAN accounts were used to earn illegal money using the stock exchange platform. But there have been cases of fraudsters using duplicate permanent account numbers to launder money. Sebi?s move to make Aadhaar mandatory is expected to help curb it. However, brokers have asked for more time to shift to Aadhaar and said they won?t be able to meet the deadline for compliance.