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.
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1.2.2. 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
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4. 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.
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8. 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
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ANNEXURE 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
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period 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.
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2.12. 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
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2.19. 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.
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