KYC Simplified From ‘Kick Your Customer’ To ‘Know Your Customer

KYC Simplified From ‘Kick Your Customer’To ‘Know Your Customer

Knowledge about customers is centric to the success of any business and this cannot be more relevant to any other business as it is to banking. But the debate on ideal ‘Know Your Customer’ norms has been raging for quite a long time with some even dubbing it as an acronym for ‘Kick Your Customer’ for all the troubles that customers go through while complying with them. Well, the RBI has moved in to lessen those harrowing times. Based on the representations and references that it received from various quarters’ especially migrant workers, transferred employees, etc. regarding problems faced in submitting a proof of current/permanent address while opening a bank account, the apex banker has suggested that henceforth customers will be needed to submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per ‘proof of address’ undergoes a change, a fresh proof of address would have to be submitted to the branch within a period of six months. In case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank for that customer. No proof is required to be submitted for such address for correspondence/local address. Th is address may be verifi ed by the bank through ‘positive confi rmation’ such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc. In the event of a change in this address due to relocation or any other reason, customers would be needed to intimate the new address for correspondence to the bank within two weeks of such a change. Well sounds fair enough at least for now.

Foreign Value

Foreigners have been bullish on India and this is already visible in the way dollars have been pouring into the equity markets so far. Th e Indian markets have been largely riding on that huge wave of dollar fl ows and scaling newer heights with every passing day. Promoters of Indian companies have always been smart enough to seize opportunities like these. Aft er all, a higher window for the FIIs to invest in the company means a sure shot way of ensuring a higher market cap. So here comes the mogul of cable television, ZEE Entertainment Enterprises which has sought an increase in the limit of FII investment in its capital to the extent of 100 per cent of its Paid-up capital from the existing 49 per cent. It’s time to watch this counter closely. Should you invest to ride the dollar wave? We will tell you exactly when to do that.

Organisational Shakeup

Stability at the top management level is a key factor in ensuring the success of any organization. Th is is especially relevant to listed companies where such changes tend to have a long lasting impact on the market cap of the company. Any sign of a shakeup at the top level triggers signals of doubts in the minds of investors who tend to get jittery and sometimes sell stock. Th is is detrimental to the market cap of the company. With the auto sector already facing a lot of headwinds the last thing that a company in this sector would want to battle is high level exits. But that is exactly what is happening at Hero Motocorp. The country’s largest two wheeler manufacturer announced a senior-level organisational change in the wake of its senior vice-president (sales & marketing), Anil Dua, tending his resignation to pursue an opportunity outside the company. Th e national marketing and sales functions will continue to be headed by Sanjeev Shukla and A Srinivasu, respectively, while the national dealer development and after-sales service functions will remain with Ajay Dikshit and Rajesh Mukhija respectively. Looks like, the resignation hasn’t really created a flutter so far. The stock has been doing well on the bourses and zoomed from Rs 2300 to almost Rs 2700 between May 16 and June 9.

Modi Impact?

This was expected and even more of these kinds will happen in the days to come. After initially toying with a convoluted idea where Maruti Suzuki was to set up a plant in Gujarat as a part of its expansion plan for manufacture of engines, Suzuki Motor Corporation of Japan, the parent company of Maruti Suzuki, will now spend `18500 crore in setting up a new factory in Gujarat. The output of this plant will be supplied to Maruti Suzuki on a no-profit no-loss basis. So the Japanese are getting smarter and setting up their feet on the Indian soil on a standalone basis even if it means selling on a no-profit no-loss basis to their existing subsidiaries. Not that it comes without any benefits. It will earn a heft y royalty once incremental sales start fl owing in from the Indian outfits expanded capacity. However the smarter move is to keep the Indian outfit outside of the purview of its local plans. Will it stop at supplying only to its Indian subsidiary or will it expand its outreach? Time will tell.

Getting Set

With the economic environment improving, companies across the board are getting set to service the increased demand for their products and services. Banking companies have been facing a lot of problems on their asset quality front, but that is supposedly not their immediate worries. At least the actions of Indian Overseas Bank which is planning to raise `1000 crore through a qualified institutional placement (QIP), or a public issue, or a rights issue or a preferential issue are suggesting so. The funds so raised are for certain expansion plans of the bank, the implementation of Basel III norms, and consequent capital charge as there is a need to increase the capital to further strengthen the Capital Adequacy Ratio. The bank also plans to raise $500 million through medium-term notes. Way to go before all this begins to yield results.

Bending To The Regulators Wish

To adhere to the regulators rules of Exchanges not being supposed to hold more than 24 per cent in market infrastructure institutions, BSE has decided to do away with the additional 30 per cent stake it holds in Central Depository Services (CDSL). It is rumored that the stake sale will happen through a IPO which could value the company at around Rs 700-750 crore. Well a windfall of nearly `200 crore for BSE. Not bad indeed.