In-person verification

Documents can be copied, stolen or bought. In-person verification is the step that ties a set of documents to a living human being who turned up.

SEBI makes it unambiguous: it is mandatory for all registered intermediaries to carry out IPV of their clients. It is not a document, it is an act — and the evidence that it happened is an entry on the KYC form naming the person who did it.

IPV sits inside the wider KYC process rather than replacing any part of it; the officially valid documents, the PAN and the address proof are all still required.

What must be recorded. The intermediary shall ensure that the name of the person doing the IPV, his designation, his organisation, his signature and the date are recorded on the KYC form at the time of IPV. An IPV with no attribution on the form is, for audit purposes, an IPV that did not happen.

Reliance between intermediaries. IPV carried out by one SEBI registered intermediary can be relied upon by another. This is what stops an investor being physically verified separately by a broker, a depository participant and three mutual funds.

Who may perform it.

When IPV is not required. Two cases, and only two:

1. Where the KYC of the client has been completed using Aadhaar authentication or verification of UIDAI
2. Where the KYC form has been submitted online and documents have been provided through DigiLocker, or any other source that could be verified online

The remote alternative. Where physical presence is impractical, the intermediary may instead undertake Video In-Person Verification of an individual investor through its app, subject to its own set of conditions.

Sahyadri Capital Pvt Ltd, a stock broker, opens three accounts on 12 February. All three end up compliant by different routes.

Client A — branch visit. Ms Kavita Rane visits the Nashik branch with her original PAN card, passport and a recent utility bill. The branch officer sees each original before accepting a copy, and records on the KYC form: "IPV done — S. Kulkarni, Branch Manager, Sahyadri Capital Pvt Ltd, 12 February" with his signature. That entry is the evidence.

Client B — authorised person. Mr D. Pawar is verified at Jalgaon by the broker's Authorised Person, appointed after approval of the exchange. Same four fields recorded. Valid.

Client C — no IPV needed. Mr A. Shaikh completes KYC online. His officially valid document is pulled from DigiLocker and his Aadhaar is verified through UIDAI's authentication mechanism. No IPV is required at all — both of the exempting conditions are satisfied, either of which would have been enough on its own.

Three weeks later. Client A applies to a mutual fund, which asks her to come in for verification. She should not have to: the IPV already carried out by Sahyadri Capital, a SEBI registered intermediary, can be relied upon by the fund.

The failure mode. During an inspection the broker cannot produce the designation of the person who performed IPV on 140 accounts opened at a branch in 2023 — the forms carry a signature and nothing else. The IPVs may well have happened. On the record they cannot be shown to have happened, and the SEBI cases in Chapter 8 turn on exactly this distinction: in the Shreepati Holdings matter, the absence of a written record of what was examined was itself the violation.

Chapter 7 (SEBI Guidelines for KYC Norms in Securities Market), section 7.2.1, is the IPV section. It is one of the most frequently examined single topics in the paper because it produces so many clean factual questions: the four fields recorded on the KYC form, who may perform IPV for a stock broker versus a mutual fund, the reliance rule between intermediaries, and the two cases in which IPV is not required.

• IPV is mandatory, and the exemptions are exemptions from IPV only. Aadhaar-based e-KYC or DigiLocker submission removes the IPV step; it does not remove PAN, proof of address, or client due diligence.
• There are exactly two exempting cases. "The client is known to the branch manager" and "the client is an existing customer of the group" are not among them.
• Reliance runs between SEBI registered intermediaries. A mutual fund may rely on a broker's IPV. The one extra route is direct mutual fund applications, where IPV by a scheduled commercial bank may be relied upon.
• For mutual funds, a distributor must have both the certification and the KYD. NISM or AMFI certification alone is not the test the workbook states.
• The record must be made at the time of IPV, and must carry name, designation, organisation, signature and date — four attributes plus the signature, not just a tick.
• VIPV is an alternative method of IPV, not an exemption from it. Do not list it as a third case where IPV is not required.