Executive Summary:
This circular, issued by SEBI on September 5, 2025, outlines the streamlined process for Know Your Client Registration Agencies (KRAs) to surrender their registration, either voluntarily or involuntarily. It details the standard operating procedure (SOP) for winding down critical operations and services, focusing on the transfer of KYC records to another KRA. KRAs must make the SOP available on their websites within 90 days of the circular's issuance.
Key Points / Main Content:
* **Background:**
* Regulation 13 of KYC Registration Agency Regulations, 2011 allows KRAs to request surrender of registration.
* The surrender process is streamlined for both voluntary (strategic/business decision) and involuntary (financial distress/regulatory actions) scenarios.
* **Critical Operations and Services:**
* The core function of KRAs is the registration and modification of KYC records and maintaining interoperability.
* Transferor KRAs must transfer KYC records to a Transferee KRA, ensuring complete data transfer and seamless client services.
* **Standard Operating Procedure (SOP):**
* KRAs must have a board-approved SOP for surrender scenarios.
* The SOP should detail the transfer of critical operations to a Transferee KRA, ensuring data protection and continuity of service.
* The SOP shall be uniform and mutually agreed upon amongst KRAs. A Model SOP is provided in Annexure A
* **Oversight for Winding Down:**
* A surrendering KRA must establish an Oversight Committee to monitor the winding-down process.
* **Compliance:**
* KRAs must comply with the SEBI Act, Regulations, Rules and relevant guidelines, including PMLA and IBC.
* Existing regulations continue to apply during the winding-down period.
* **Applicability and Review:**
* KRAs must publish the SOP on their websites within 90 days of the circular date.
* The SOP must be reviewed periodically, at least once every 5 years.
* **Model Standard Operating Procedure (SOP) - Annexure A:**
* Details the process for selecting a Transferee KRA, including disclosing KRA operations and services.
* Requires a non-disclosure agreement between Transferor and Transferee KRAs.
* Specifies the procedure for voluntary surrender, including board approval, SEBI application, stakeholder notification, and data transfer.
* Requires audits of KYC records and a jointly signed compliance report to SEBI.
* Outlines timelines for various activities, including intimation to SEBI (T+7 days), communication to stakeholders (T+14 days), and data migration (T+60 days).
* Addresses procedures for involuntary surrender due to financial distress or regulatory action, potentially involving a temporary administrator appointed by SEBI.
Impact Analysis
**KYC Registration Agencies (KRAs):**
* *Impact:* Must develop and implement a board-approved SOP for surrender of registration, whether voluntary or involuntary. They are responsible for the secure transfer of KYC data and ensuring continuity of service to clients.
* *Action Required:* Create and publish the SOP on their website within 90 days. Establish an Oversight Committee. Review and update the SOP periodically.
**Investors:**
* *Impact:* Their KYC data must be seamlessly transferred between KRAs, ensuring no disruption in service. They should receive timely notification about the transfer of their records.
* *Action Required:* No immediate action is required, but they should be aware of communications from KRAs regarding the transfer of KYC records.
**Registered Intermediaries:**
* *Impact:* They need to adapt to the transfer of KYC records between KRAs and may need to shift their integration to another KRA if desired.
* *Action Required:* Monitor communications from KRAs and adjust their systems as necessary to ensure uninterrupted access to KYC records.
**Securities and Exchange Board of India (SEBI):**
* *Impact:* SEBI oversees the entire surrender process and has the authority to approve or reject applications for surrender. SEBI may also appoint a temporary administrator or directly nominate a Transferee KRA in certain involuntary scenarios.
* *Action Required:* Review and approve KRA applications for surrender. Conduct inspections/audits of Transferor KRAs' systems and records. Issue directions and instructions as needed.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The regulatory body overseeing Know Your Client Registration Agencies (KRAs) and the securities market in India. SEBI is responsible for granting and overseeing KRA registrations, and ensuring compliance with regulations.
KYC Know Your Client Registration Agency (KRA): An agency registered with SEBI that maintains KYC records of investors. The circular provides guidelines for the surrender of KRA registration, ensuring the smooth transfer of KYC data and continuity of services.
SEBI KYC Know Your Client Registration Agency Regulations, 2011: The regulations governing the registration and operation of Know Your Client Registration Agencies (KRAs) in India. The circular references these regulations and their continued applicability during the winding down process.
Standard Operating Procedure (SOP): A documented procedure that KRA must develop and implement for the surrender of KRA registration. It outlines the steps for transferring critical operations and services to another KRA, including data migration and stakeholder communication.
Transferor KRA: A KRA that is surrendering its certificate of registration and transferring its KYC records to another KRA.
Transferee KRA: A SEBI registered KRA that is receiving the KYC records and taking over the critical operations and services of a Transferor KRA.
Securities and Exchange Board of India Act, 1992: The act that establishes the powers and functions of SEBI. The circular is issued under Section 11(1) of this act.
Insolvency and Bankruptcy Code (IBC): A law related to insolvency and bankruptcy resolution, which KRAs must adhere to during the surrender process, especially in cases of financial distress.
CIRCULAR
SEBI/HO/MIRSD/PODFATF/P/CIR/2025/123 September 05, 2025
To,
All KYC (Know Your Client) Registration Agencies (KRAs)
Dear Sir/Madam,
Subject: Streamlining of the process for surrender of (Know Your Client)
Registration Agency (KRA) registration.
1. Background :
1.1. Regulation 13 of {KYC (Know Your Client) Registration Agency} Regulations,
2011 provides that a KRA, who has been granted a certificate of registration
under the Act or the regulations made there under, may make a request for
surrender to the Board, duly satisfying the Board, about the factors, as it deems
fit, including but not limited to :
The arrangements made by KRA for maintenance and preservation of
records and other documents required to be maintained under these
regulations;
Transfer of records of its clients;
The arrangements made by it for ensuring continuity of service to the
clients;
Redressal of investor grievances;
Defaults or pending action, if any.
1.2. In this context, based on the inputs received from the stakeholders, it is
decided that the process for surrender of KRA registration should be
streamlined for voluntary/involuntary scenarios so that critical operations and
services of KRA are wind down in orderly manner.
1.2.1. Voluntary: The KRA wishes to surrender its registration i.e. wind down
its critical operations and services and exit as a result of strategic or
business decision.
Page 1 of 81.2.2. Involuntary: Where surrender of registration (winding down) arises, is
due to financial distress, or regulatory actions, including suspension or
cancellation of SEBI registration.
2. Critical Operations and Services of KRAs :
2.1. The registration and modification of KYC records of investors through
registered intermediaries and maintaining interoperability amongst KRAs for
facilitating portability of such records is a core function of KRAs and shall
considered as critical.
2.2. KRA surrendering its certificate of registration (hereinafter referred as
''Transferor KRA'') must transfer KYC records available with it to another SEBI-
registered KRA (hereinafter referred as "Transferee KRA") ensuring complete
transfer of client records, including updates and modifications thereof along
with audit trail without loss or tampering of data enabling seamless client
services of KRAs without requiring fresh KYC.
3. Standard Operating Procedure :
3.1. KRA shall have in place, a Standard Operating Procedure (SOP) to be followed
in case any of the scenarios as mentioned at paragraphs no. 1.2 above, getting
triggered. The SOP shall be approved by the board of the KRA.
3.2. SOP should outline the manner in which the critical operations and services of
the Transferor KRA to be transferred to Transferee KRA ensuring continuity
and protection of KYC data of investor and registered intermediaries,
settlement of contractual and statutory obligations and avoidance of disruption
in the securities market. The SOP should specify, the operational modalities
relating to transfer of records, data, documents etc. in detail, duly considering
interoperable as well as non-interoperable scenarios, as applicable.
3.3. Considering KRAs are interoperable, to ensure the portability of KYC records,
the SOP shall be uniform and mutually agreed upon amongst KRAs. Model
SOP in this regard is provided at Annexure A
Page 2 of 84. Oversight for Winding Down :
4.1. KRA surrendering its certificate of registration shall constitute an Oversight
Committee which shall be responsible for monitoring the winding down process
including transfer of KYC data, seamless investor services, etc as specified
under the SOP.
5. Compliance :
5.1. KRAs shall ensure compliance with the SEBI Act, Regulations, Rules and
relevant guidelines issued from time to time. Applicable Acts/Codes such as
Rules made under Prevention of Money Laundering Framework, Insolvency
and Bankruptcy Code (IBC) shall also be adhered to.
5.2. The provisions of SEBI {KYC (Know Your Client) Registration Agency}
Regulations, 2011 and various circulars and guidelines issued thereunder,
shall continue to apply during the entire period of winding down of critical
operations and services of KRA.
6. Applicability and Review :
6.1. KRA shall make the SOP available on their websites within 90 days from the
date of issuance of this circular.
6.2. The SOP shall be reviewed periodically as and when circumstances
warrant/necessitates or at least once in a 5 years.
7. This circular is issued in exercise of powers conferred under Section 11(1) of
Chapter IV of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities markets and shall come into effect from the date of this
circular.
Page 3 of 88. The Circular is issued with the approval of the competent authority.
9. This circular is available at www.sebi.gov.in under the link “Legal --- Circulars”.
Yours faithfully,
Sapna Sinha
Deputy General Manager
Tel. No. 022-26449748
sapnas@sebi.gov.in
Encl.: As above
Page 4 of 8ANNEXURE A – MODEL STANDARD OPERATING PROCEDURE (SOP)
1. Selection of Transferee KRA:
1.1. The KRA intending to surrender its certificate of registration shall disclose
details pertains to its KRA operations and services such as number of KYC
records, infrastructure, employees, contractual agreements/obligation and
other relevant information to all other KRAs, communicating its intention to
wind down its critical operations and services.
1.2. Transferee KRA may be identified through transparent process such as
inviting interest from other KRAs. The procedures for selection of Transferee
KRA should be included in the SOP.
1.3. Transferor KRA and Transferee KRA shall execute a non-disclosure
agreement in addition to the agreement for transfer of KRA operations which
should contain transition plan for winding down of critical operations and
services of Transferee KRA.
2. Procedure to be followed in scenario of voluntary surrender of registration /
winding down
2.1. Transferor KRA shall get the proposal for voluntary surrender of certificate of
KRA registration (and thereby winding down its critical operations and
services), approved by its Board for the trigger event so specified.
2.2. Transferor KRA shall apply to SEBI for surrender of its registration as per
extent process along with transition plan for winding down of its critical
operations and services, within 7 working days of approving the decision by
its Board.
2.3. The KRA proposing winding down its critical operations and services, shall
require to obtain in-principle approval from SEBI to commence the process
of winding down and comply with directions /instructions as may be advised
by SEBI.
2.4. Transferor KRA shall notify stakeholders (intermediaries including other
KRAs, investors, creditors, Industry Associations etc) within seven working
days, regarding its decision to wind down duly mentioning a sufficient notice
Page 5 of 8period for inviting objection, if any, on commencement of procedure for such
winding down. For this purpose Transferor KRA shall send a communication
to the existing KYC holders clearly informing them the name of the
Transferee KRA and the timeline for transfer of such records. A public notice
in national & regional dailies should also be published.
2.5. Transferor KRA shall declare a cut-off date in the notice indicating date from
which critical operations of Transferor KRA are being taken over by the
Transferee KRA. No new records in the system of Transferor KRA would be
created after said cut-off date.
2.6. Transferor KRA should provide sufficient time and opportunity to registered
intermediaries integrated with it, to shift their integration to any other KRA, if
intermediaries so desired.
2.7. Transferor KRA shall perform audit of its KYC records to ensure
completeness and accuracy of KYC data and submit report to SEBI and
Transferee KRA.
2.8. Transferor KRA should transfer securely, investors KYC data and integration
records of registered intermediaries to Transferee KRA in an agreed format
with full audit trail ensuring encryption, completeness and integrity as per
agreed transition plan.
2.9. Transferor KRA shall continue limited operations such as facilitating updation
of existing KYC record, fetch of KYC records through intermediaries and
investor assistance until such a time the secured transfer of data is
completed.
2.10. Transferor KRA shall obtain final audit certificate effecting such transfer of
KYC records from its system to the system of Transferee KRA.
2.11. Once transfer of data is complete an internal auditor of Transferee KRA shall
audit the KYC records on a random basis and tally the total number of
records transferred between the Transferor and Transferee KRA. Transferee
KRA shall confirm receipt and integration of all records within a period as
prescribed under the SOP.
Page 6 of 82.12. Transferor and Transferee KRA shall submit a jointly signed compliance
report to the SEBI confirming complete transfer of records, seamless
continuity of services, and no inconvenience caused to the investors or
intermediaries.
2.13. Within a period of three months of going live post transfer of the data and
records of Transferor KRA, Transferee KRA shall provide approval/no
objection for exit of Transferor KRA. During this period Transferor KRA
should extend all technical and operational support to Transferee KRA.
2.14. SOP so disclosed on the website of KRAs shall also provide timeline for
deactivation of website, system access and shut down of front end API.
2.15. Transferor KRA and Transferee KRA shall ensure that intermediaries
integrated with Transferor KRA continue to access KRA records. Suitable
clause to this effect may be incorporated in their operation transfer
agreement.
2.16. Transferor KRA shall settle regulatory dues, contractual obligations with
intermediaries, service providers, and investor complaints before exit.
2.17. Transferor KRA should continue to operate investor support desk for a period
of twelve months post approval of surrender of its registration by SEBI.
2.18. Transferor KRA and Transferee KRA shall ensure seamless transition as
provided in the approved transition plan submitted to SEBI. In this regard, an
indicative timeline for wind down is provided hereunder:
Activity Timeline
Approved Board Resolution Day T
Intimation to SEBI T+7 days
Communication to stakeholders T+14 days
Data migration & system deactivation T+ 60 days
Audit & Closure T+75 days
Submission of compliance report to SEBI T+90 days
Page 7 of 82.19. Supervisory inspections remarks/queries raised by SEBI or any other
statutory authority, if any pending, shall be addressed.
2.20. SEBI may conduct an inspection/audit of the Transferor KRA's system and
records before accepting/disposing the application for surrender of KRA
registration.
3. Procedure to be followed in scenario of involuntary surrender of registration
/ winding down (due to factors such as financial distress)
3.1. In a scenario of involuntary winding down due to factors such as financial
distress, the KRA would be require to follow similar procedure as laid down
for voluntary winding down mentioned at para 2 above.
3.2. In specific regulatory enforcement scenarios, SEBI in the interest of investors
and market stability, may or may cause to appoint a temporary administrator,
directly nominate an acquirer (Transferee) KRA and mandate winding down
timelines, override provisions and timelines prescribed under the SOP.
4. Procedure to be followed in scenario of involuntary surrender of registration
/ winding down (due to regulatory action)
4.1. SEBI or any other statutory/regulatory authority may direct a KRA to wind
down its critical operations and services on the grounds, including but not
limited to the non-compliance of either the conditions of grant of registration
or renewal, wherever applicable.
4.2. In such scenario, procedure as laid down at para 2 above should be followed,
except for para 2.2, wherein such regulatory action directing to wind down
the operations of KRA shall be construed as a trigger event and case specific
direction(s)/relaxation(s), if any issued by the SEBI, shall prevail over such
pertinent stipulations of para 2.
4.3. In specific regulatory enforcement scenarios, SEBI may or may cause to
appoint a temporary administrator, directly nominate an acquirer KRA and
mandate winding down timelines, override SOP timelines in the interest of
investors and market stability.
Page 8 of 8