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Permanent Account Number must for all financial transactions

DUBAI — India's market regulator has said it would make PAN (Permanent Account Number) the sole identification number for all participants in the securities market, including mutual funds, from July 2.

The new direction by the Securities and Exchange Board of India (SEBI) comes after it made the Permanent Account Number mandatory for those trading in shares through depository participants.

"It has been decided that PAN would be the sole identification number for all participants transacting in the securities market, irrespective of the amount of transaction," Securities and Exchange Board of India said in a recent circular.

The regulator has asked all the intermediaries to put in place the necessary infrastructure to facilitate any query based on PAN for getting the details of clients' transactions. It has also asked the stock exchanges and depositories to make necessary amendments in the relevant bye-laws, rules and regulations for the immediate implementation of the decision.

SEBI took the decision following Finance Minister P. Chidambaram's budget proposal to make PAN the sole identification number for all participants in the securities market with an alpha-numeric prefix or suffix to distinguish a particular kind of account.

Earlier, Association of Mutual Funds of India had decided to come out with a Mutual Fund Identification Number, but the idea was dropped after the budget announcement. Already, investors who have not submitted their PAN to the depositories are not allowed to trade in securities.

SEBI's circulars dated July 13, 2006 and September 26, 2006 had earlier stipulated that PAN would be mandatory for trading in the cash market with effect from January 01, 2007. SEBI's circular dated September 26, 2006 had also stipulated that PAN would be mandatory for operating "demat accounts" with effect from January 01, 2007. These mandates have come into force and have been operationalised.

K.V. Shamsudheen, Director of Barjeel Geojit Securities LLC said the Dubai-based firm is helping investors to obtain PAN card. The documents required are passport photocopy, passport size photograph and local bank account statement with foreign address, for address proof.

The SEBI circular said "in order to strengthen the Know Your Client norms and identify every participant in the securities market with their respective PAN thereby ensuring sound audit trail of all the transactions, it has been decided that PAN would be the sole identification number for all participants transacting in the securities market, irrespective of the amount of transaction." SEBI has issued a circular in this regard advising the intermediaries to put in the necessary systems in place so that all the individual databases of their clients and clients' transactions are linked to the PAN details of the client.