If a client is already KRA verified with other broker - does he/she need to IPV/VIPV again with zerodha?
Of course during account opening with other broker IPV was done (that is why KRA verified status)
To my understanding SEBI says if you client is already have an account with other broker(so verified - he/she does not need to do it again because Zerodha(or any broker) can verify the status of verification.
The issue is, assume you did your KRA with Broker A. Now, someone starts online onboarding at Zerodha using your details. The person has access to your PAN copy, AADHAR details, bank details, etc. This person can potentially onboard with us saying it is you. So it is imperative for the broker to double check if the person opening the account is the same person whose KYC from KRA is being used.
This check is important because creating benami accounts in India is a big tax evasion problem. People create bank accounts (even trading accounts) as someone else, do a lot of transactions in that and then withdraw the money. The actual person gets to know only when there is an income tax notice.
So while documents may not be required to open another account, a video in person verification of the person is the right thing for any broker to follow everytime an account is being opened.
I had written this post on KYC, it might be of interest to you
I am glad this time you did not say - oh some govt agency requires IPV has to be done every time - even though KRA is verified previously. Because sebi on this link says it is not required if it is already verified.
You said someone else with my documents can open an account but how can he/she verify Aadhar because Aadhar OTP can be only be sent to mobile no. that is registered during Aadhar opening.
Also, you yourself mentioned that bank accounts are already KYC compliant so sebi should take it easy on KYC and you are contradicting your own self.
Also, I think this is overstretched on your part because that scammer needs to open a bank account in my name to withdraw funds. I can’t imagine one can open a bank account without with going to bank in person.
Further I have noticed a pattern in your policies that you make unreasonable demands like until now POA was must which is the reason why I closed my account with you. I believe there are many others who did the same because you never know what would a broker do behind your bank with your money or shares. Yes you are leader in this industry but when you try to be monopolistic (by way of take it or leave it attitude) it’s not fair.
I did ask with couple of brokers and they said they don’t require it. But ultimately you are the boss.
I was part of the committee that suggested that SEBI circular. I think not asking for an IPV of the person opening an account is a mistake, I and many others have already shared the same view. I think it will most likely be changed mandating IPV during onboarding.
While you as a customer can be myopic and just think of what is good/bad for you, I as the CEO of the business has to figure the worse outcomes of everything we do as a business and cover for as many of them as possible. We have come across many benami frauds in the history of our business, so we have to do what we have to do to ensure it doesn’t happen.
Of course SEBI shouldn’t ask for the KYC to be done again if the bank KYC is already done. I have been fighting it out for many years. But this isn’t about KYC, this is about IPV right? Making sure that the person opening an account is the same person whose KYC is being used. I don’t see what your problem is on this. But yeah, you’d know better I guess.
Yes this is about IPV but my point is – Potential scammer needs to open a bank account in my name to withdraw funds. I can’t imagine one can open a bank account without with going to bank in person. So indirectly IPV is already done when a person opens a bank account-- of course KYC is also done at the same time. Why would anyone else open a trading account in my name unless he/she can deposit and withdraw funds. I already know that every broker checks that name on trading account and bank account has to match.
You said you and many others shared view about IPV must everytime but still SEBI is in opinion that it is not necessary correct ??
please check section 4 - ix 1 and 2 - it clearly says - PV/ VIPV would not be required when the KYC of the investor is completed using the Aadhaar authentication / verification of UIDAI and it says IPV/ VIPV shall not be required by the RI when the KYC form has been submitted online, documents have been provided through digiocker or any other source which could be verified online.
Yes, I could be myopic because I believe in least hassle approach …if it is not necessary - why waste time and energy? On a side note CDSL provided easiest facility but you refused to use it — so if you ask what my problem is – I don’t like these type of contradictions and attitude that either my way or highway.
Like I said, just because you think it isn’t possible, doesn’t mean it isn’t. Last year we had a scammer who had opened an account as Zerodha Broking with a cooperative bank in West Bengal and collected money from customers pretending to be a partner of Zerodha. We have had multiple cases (when we used to not insist in IPV) of clients coming back to us after receiving an Income tax notice saying they never traded. Btw trading is done in other people’s PAN to avoid paying taxes (so someone opens fake bank and fake trading and does this). So like I said, we have to cover all angles. As you probably already realize, making account opening slower means more dropoffs. If we are doing it there must be a reason behind it.
Like I said, I think it is not right and we have requested SEBI to make IPV mandatory.
I guess have explained this earlier already. There is no way for us to operationally support easiest where we have to rely on customer transferring shares. At least not at our brokerage cost. The reason for whatever little success till now is because right from day 1 of the business we have had one rule for all our customers - either they take it or use someone else.
I guess SEBI should make the IPV mandatory for KRA verified clients as well. IPV is actually a simple process, I guess even through your smartphones you can complete the IPV process within no time. Because there are scenarios where scamsters are looking for such loop holes. For example if someone is already dead and who is KRA verified then you can still open an account with his name(without doing IPV) if you have the access to his proofs. Even family members can also open an account with dead person’s name and potentially use that account for money laundering. So IPV is essential to prevent such frauds in my opinion.
A scammer opened an account as Zerodha broking and collected money from customers to be a partner of Zerodha has nothing to do with IPV you make mandatory for a trading/demat account. I understand I can make a fake company for example 'Zerodha ventures and open an account as that trade name by visiting its branch, but opening a personal account in someone else’s name with a branch …I can not think of any way to do this because to my knowledge all banks would want you to go in person. So please enlighten me how can someone open a fake bank account.
[quote=“nithin, post:6, topic:79728”]
There is no way for us to operationally support easiest where we have to rely on customer transferring shares
This is beyond my understanding. I have a brokerage account for about 2 years and I am using CDSL easiest for a long time. It is very simple - Before I want to sell my shares or pledge I have to transfer it to my broker’s collateral account - its takes less than 24 hours. So only downside using easiest is I have to wait till next business day, I can not sell on same day. To me that option is way better than worry about giving POA to broker. Btw that brokerage way less than yours, almost free. That broker never asked POA from me instead broker himself suggested to use CDSL easiest - otherwise I would not have known about it. So you are saying you can not support easiest is like you are saying oh POA IS MUST. You are saying IPV is mandatory because of client’s safety - on contrary you should say easiest is mandatory is for client’s safety.
Look main reason for your success is your business model and products. Not primary because you care for customers. All entrepreneurs have few things in common - they can see an opportunity and have courage to convert opportunity in to success(money). You saw there is lack of education about trading in Indian community so created FREE varsity. So new traders will join trading(in a way it is still gambling for majority of traders) and become your customers. Next you saw traditional brokers are charging a lot - so why not use technology to cut the cost and use this opportunity to attract large pool of customers by luring them with 20 Rs. brokerage. Of course earning 20 Rs. from 1,000,000 customers is more than earning 50 Rs. from 100,000 customers right? Look before Malya, Rana Kapoor, Wadhwan, Nivav Modi and others were caught they were admired and respected but people know about them only after they were caught. I am not saying you are like them - all I am saying you are in business and in business to make money so don’t try to imply otherwise either on the name of Govt agencies rules or customer’s safety n wealth protection is your priority.
I knew I shouldn’t have gotten into this discussion as there are some who can’t be convinced, you seem like one of them. By yeah, last attempt, I am not going to respond after this.
To open a fake bank account, all you need is 1 compromised bank employee. Banks rely on their employee for IPV and if he is compromised the account gets opened. If you think bank employees in this country can’t be compromised, then yeah no point discussing.
I hope you atleast agree that maybe I know more about our business, than you, who is not even our client. Our business doesn’t just work because of what you see as a customer, it also works because what goes on behind the scene. You as a customer is just privy to our product, features and our initiatives, and not our processes.
Of course we can take shares from our customer using easiest before selling, add it to your holdings on trading platform, track if you have sold them or not and if not transfer it back to your demat. This can be done if we charged say 0.3 to 0.5% brokerage charge, and if we had 10,000 customers. But this isn’t possible with zero brokerage and 2.6 million customers.
You can’t come to a self-service restaurant and ask why don’t you have waiters to serve. If you want waiters, you have to go to a restaurant where there are waiters, pay a little extra.
Again, you are implying that we don’t care for the customers, if we didn’t we wouldn’t be here. Every single thing we do as a business is keeping customer interest before business. But yeah, you are free to think whatever. I am sure you will still have an argument. But I am closing this thread, so I don’t have to spend more time on this.