Aadhaar Verification May Now Be Mandatory For Share Trading, MFs
Can it weed out the black money from Dalal Street?
As per reports coming in from various sources, we have learnt that Govt. may soon make Aadhaar as a mandatory requirement for trading equity shares, buying or selling mutual funds and more.
In fact, if we believe the few people who are close to this development, PAN Card maybe permanently removed as the de facto authentication tool for trading stocks and shares.
Very soon, it would be the Aadhaar which you need for making money inside the stock exchange. An unnamed official, who is learnt to have knowledge about this major transition said, “We have been told that making Aadhaar compulsory is in the offing,”
Now, the question is, can Aadhaar weed out black money from Dalal Street?
Aadhaar Must For Equity Trading: The Reason?
As per reports coming in, Securities and Exchange Board of India (SEBI) is in talks with the Govt. of India, for making Aadhaar as a mandatory requirement for stock and equity trading in every listed stock exchange.
And the reason behind this is the ineffectiveness of PAN Card to stop the flow of black money into Dalal Street, the area where stock exchanges are located in Mumbai.
As we already know, there are stock brokers who are using multiple PAN Cards to transact using various mediums, and India loses income tax due to this reason.
Very soon, it would be Aadhaar which would be used as e-KYC for opening trading accounts, for buying or selling stocks and to invest in mutual funds as well.
Industry Reaction? Good, Bad or Ugly?
There has been mixed reactions to this news.
While some veterans are supporting this move, because they know that black money issue will only harm the trading houses.
Nirmal Jain, chairman, IIFL Group said, “Linking financial market transactions to Aadhaar will be an important step to make India a corruption-free country.”
In fact, as per Jain, PAN should be completely abolished, and only a single verification medium – Aadhaar should exist.
He said, “It is important that the government replaces PAN and other identification documents with Aadhaar in financial markets and all other services to make it convenient for people.”
On the other hand, there are few brokers who feel that introduction of Aadhaar instead of PAN as e-KYC will bring down their business, and lots of investors will shy away from signing in using Aadhaar.
Unnamed CEO of a brokerage firm said, “For some of the regional players, the bigger worry is how many clients will remain once Aadhaar is made mandatory. There will certainly be a dip in activity even in IPO market but that will be temporary.”
Right now, Aadhaar is being used as a form of e-KYC for mutual fund trading, as an optional way for verification.
But once it is made compulsory, then a new order would be established, with Aadhaar being the foundation.
Will it help to curb black money flow into stock market? Do let us know by commenting right here!