The requirement of having a PAN has been made mandatory by the Securities and Exchange Board of India (SEBI). In accordance with the SEBI guidelines, the Depositories, NSDL and CSDL requirements state that a PAN card is now compulsory documents for all categories of demat account holders.

In case of joint accounts, this requirement applies to each of the joint holders to the account. The demat account holders need to visit the nearest branch with their PAN card and submit a copy at the earliest. As per NSDL’s and CSDL’s policy, demat account holders will not be permitted to operate their accounts from October 1, 2006, if a copy of the PAN card is not made available by September 30, 2006.

Any investor who has PAN but not having the PAN card may be permitted to open a Beneficiary Owner (BO) account subject to producing the PAN allotment letter. However, such investors would be required to produce the PAN card on or before September 30, 2006 failing which the DPs will freeze such accounts as ‘suspended for debit’ till the PAN card is produced for verification.

NRIs and PIOs would also be required to comply with the mandatory requirement of producing the PAN card at the time of opening a beneficiary owner account. However, NRIs and PIOs who are not able to obtain PAN for one reason or the other but are holding securities in physical form and want to sell them, may be permitted to open a ‘limited purpose BO account’ without a PAN.

The operation of such BO accounts will be subject to these conditions:

• These accounts will be ‘suspended for credit’. So only credits arising out of corporate benefits and demat of physical certificates will be permitted.

• These accounts cannot be used for getting credit from IPOs, off-market transactions, any secondary market transactions etc.

• These accounts can remain operational only for a limited period of six months from the date of opening of the account.

Meanwhile, the account holders may be permitted to convert the account into a normal BO account subject to complying with the PAN requirements. If the account holder fails to produce the PAN card within the stipulated period of six months, the DPs will freeze the account.

The account holders will be permitted to sell the securities lying in these accounts only through a registered broker on the stock exchange

In case of a HUF, association of persons (AoP), partnership firm, unregistered trust etc, though the BO account would be in the name of people, the PAN of the respective body will be obtained. As regards a registered trust, corporate body and minors, the PAN of the respective entities will be obtained when accounts are opened in their respective names.

In case where there is difference in the maiden name and current name of the investor (predominantly in the case of married women), DPs can collect the PAN card proof as submitted by the account holder. However, this would be subject to the DPs verifying the claim by collecting sufficient documentary evidence in support of the identity of the investor.

All entities registered with SEBI under Section 12 of the SEBI Act 1992 and having some difficulty in producing PAN card for verification at the time of opening the BO account may be permitted to open a BO account without producing the PAN card. However, such entities would be required to submit the PAN card to the depository participants within a period of 30 days from the date of opening of the BO account for verification, failing which the DPs will freeze the account.

As regards proof of address of FIIs/subaccounts , a copy of the power of attorney (PoA), duly notarised, given by the FIIs/FII sub-accounts to the custodians, that gives the registered address of the FIIs/sub-accounts , can be accepted as proof of address.

UN entities and multilateral agencies which are exempt from paying taxes/filing tax returns in India are exempted from the mandatory requirement of PAN. The exemption, however, would be subject to the DPs collecting documentary evidence in support of such claim of the investors.

The investors residing in the State of Sikkim are exempted from the mandatory requirement of PAN. However, this would be subject to the DPs verifying the claim of the investors that they are residents of Sikkim, by collecting sufficient documentary evidence in support of the address.

A fundamental aspect of the relationship between you, as an Indian citizen, and the Indian state may soon radically change: so far, you are in the eyes of the state constitutionally presumed innocent unless proved otherwise. This presumption of innocence, not in a court of law but in everyday affairs, will no longer be valid if Indian citizens are required to carry, and produce on demand, identity cards issued by the state.

Though the ID card proposal mooted by Delhi’s Lieutenant-Governor seems to have been dropped after a flurry of protests from various politicians, jurists and citizens’ groups, a Multi-Purpose National Identity Card project (first mooted by L K Advani during the tenure of the NDA government) is still in the pipeline. The avowed purpose of ID cards is to strengthen security. But in effect, as many have pointed out, mandatory ID cards for citizens merely increase the risks of police and other official harassment of citizens who, in order to demonstrate their bona fides have to produce the required documentation, a failure to do so being tantamount to a determination of guilt.

In practical terms, the introduction of a generic ID card (as distinct from use-specific cards such as the Voter ID card, the PAN card, the ration card, etc) would greatly increase the scope for police corruption and intimidation, hazards which are already entrenched in our day-to-day lives. However, it is in the constitutional relationship between the citizen and the state that the more insidious and the greater damage would be done. Unlike the French judicial system where the accused is required to prove his innocence, in Indian law (as derived from British jurisprudence) the presumption of innocence is a fundamental right of the citizen.

It is a right, however, that is often grossly violated in countless cases of wrongful detention, the use of third-degree methods to obtain a ‘confession’, lethal ‘encounters’, and other instances of the state’s misuse of its powers.

And the powers of the Indian state – in theory if not in practice – are already only too formidable when viewed from the perspective of the common citizen who has little or no protection from repressive laws which often make a cruel mockery of our democratic and supposedly free society. In the sacred name of national security, the common citizen – whose security and safety should be the paramount concern of the nation state – has been subjected to the often vicious implementation of laws such as TADA, and its subsequent avatars of POTO and POTA, cute-sounding acronyms that disguised an official sanctioning of state brutality.

Though TADA and its successors have been scrapped, the Armed Forces Special Powers Act, 1958 continues to provide protective camouflage to state terror perpetrated against individuals in the name of national security. Far from strengthening national security, the misuse of the state’s powers has deeply undermined the foundation of the polity, as witnessed by the frightening fact that some 160 districts of the country, comprising over 180 million people are under ‘Naxal’ control.

So much for ‘national security’. Using the mantra of national security, the state has progressively encroached on individual liberties: from phone-tapping to cyber-snooping, from police barriers that impose daily stress on already harried commuters to the ‘bandobast’ for ‘VVIP movement’ which totally dislocates the normal functioning of city life.

At the end of his tether, thanks to official zulm , it is not the common citizen who ought to be asked to prove his credentials by an extra ID card. Rather, it is officialdom that needs to produce a clean chit certifying that, despite evidence to the contrary, ours is not in fact a police state but still a democracy. Or is it? Is the state innocent, or guilty? And how is it going to prove it, either way?

Source : Times of India

Beginning February 2, the permanent account number (PAN) will serve as the common identification number for all mutual fund (MF) investments above Rs 50,000. This single number will work for all MFs — unlike today when each investor has to provide a separate number (folio number) issued by each of the 32 fund houses.

Along with PAN, investors would have to provide all documents required to service the funds’ know-your-customer (KYC) norms. They will receive an acknowledgement number from CDSL Ventures Ltd (CVL) and their PAN card number will act as the number that will be used as the common identification number, said the compliance officer of a mid-sized fund house. This is because the capital markets regulator, the Securities and Exchange Board of India (Sebi), has already issued guidelines according to which separate number cannot be issued.

At present, all mutual fund investors investing online are first required to fulfil the KYC norms with each individual fund house and issued folio numbers by them. This number is then used to invest with that fund house. “Once the investor has established his identity with a fund house through KYC, he can use his folio number to invest further with that house. But now we are trying something like issuing a common number that can be used by all fund houses for investment by an investor,” explained the chief executive of a large fund house. “It should be out anytime now,” he added.

Proceeding with the KYC formalities repeatedly with every fund house is a tedious process and to maintain 32 folio numbers for investing in the 32 fund houses is rather impractical. Once PAN is made the default number for investing in MFs, it will convenience direct mutual fund investors and allow them to invest on the same day’s NAV with any fund house. Currently, investments get delayed because of the cumbersome process of first getting the KYC done from the mutual fund’s office and then getting permission to invest. The entire process takes seven to 10 days.

Against this, distributors get the KYC process done immediately and the direct investor misses out not only on the immediacy of investment but has to pay 2.25-2.5 per cent to the distributor, irrespective of whether he routes the money through the distributor or not.

Armed with PAN and an acknowledgement number issued by the CVL, direct investors will now have a more trouble-free investment ambience.