Aadhaar that 12-digit unique identification number issued to you by the Central Government of India, can be a game changer for the financial services industry. Looks like you need Aadhaar for pretty much everything. You need Aadhaar to get your LPG subsidy, to file income tax returns, to open a bank account or apply for a PAN card.
You need Aadhaar to get a new mobile number, to get scholarships and even concession on railway tickets. Now, Aadhaar could soon be compulsory for buying shares and mutual funds. The Government is joining hands with SEBI, the capital market regulator and wants to link Aadhaar to your financial transactions.
The Government is very serious on stopping black money in the economy. After chasing black money hidden in 500 and 1000 Rupee notes during demonetization, the time could now be for stocks and mutual funds. By linking Aadhaar to financial market transactions, the Government could curb the practice of converting black money to white using the stock market.
So will Aadhaar be compulsory to buy stocks and mutual funds? Let's find out. Want to know more on stocks and mutual funds? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
PAN is compulsory for stock market transactions. But, the Government feels PAN cannot stop shady transactions in the stock market, used to convert black money to white. Many duplicate PAN's have been detected and deactivated by the Government. Over 11.44 Lakh PAN cards have just been deactivated. Worried that your PAN has been deactivated. Check here.
The Government recently said that Aadhaar be linked with PAN, bank accounts and mobile numbers. The deadline for existing bank account holders to link their bank accounts with Aadhaar is December 31st. At present, it is not very clear if Aadhaar will replace PAN as a single identification number, for financial market transactions. Aadhaar could be used for the mandatory KYC (Know Your Client) check, done for mutual fund transactions online.
e-KYC also known as online KYC is done using Aadhaar. You and other mutual fund investors do not need to go to mutual fund houses to submit forms and signatures are identified in person.
Stock brokers want SEBI to talk to the Government to extend e-KYC (Online KYC) not just to mutual funds, but also to stocks. Stock operators believe linking Aadhaar to financial market transactions could curb black money flowing into stocks.
PAN is a unique number, yet, it has not been able to stop you and other investors from using stock markets for money laundering. You could have multiple PAN's and fake demat accounts and easily push illegal/black money into the stock market.
Stock market brokers believe the Government should replace PAN and other identification documents with Aadhaar in financial markets. This could be of great help to you and other citizens. Don't you think this is a great idea?
See Also: how to apply pan card duplicate?
Some stock market brokers are worried that you and other clients might run away from the stock market, if Aadhaar is made compulsory. Yes, they do have a point. Stock markets have just hit Mount 10K. For those who don't quite follow what I am talking about, Nifty has just hit the crucial 10,000 level for the first time ever, creating history.
You and other investors are rushing to grab IPO's. It's literally been the season of IPO's as many companies have listed on the stock exchanges, giving investors bumper returns. If you have invested in a couple of recent IPO's and were lucky to get allotment, you would have got more than 100% returns on your investment.
Some of the investors will flee the stock market and there could be a little pain if Aadhaar is made mandatory to buy stocks. But, in the interests of the industry this could be a good move in the long run. Don't you think so?
See Also: Stock Exchanges In India
The Government has made a brilliant move. Making Aadhaar compulsory to buy stocks and mutual funds can curb black money in the stock market. But, the Government also has to be very careful to ensure security of Aadhaar data. You and other citizens should be empowered to complain if Aadhaar data has been misused. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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