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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management

In the operations of an investment adviser or portfolio manager, which of the following is the primary purpose of a 'Know Your Client' (KYC) process carried out through a SEBI-registered KYC Registration Agency (KRA)?

The KYC process through a KRA verifies the client's identity and keeps a centralised, uniform record that different SEBI-registered intermediaries can reuse. It is about identification and record-keeping, not about guaranteeing returns, setting fees or rating portfolios.

  1. ATo guarantee a minimum return to the client
  2. BTo verify client identity and maintain a centralised, uniform KYC record usable across intermediariesCorrect
  3. CTo fix the advisory fee payable by the client
  4. DTo assign a credit rating to the client's portfolio

Explanation

KYC establishes the identity and address of the client and, through KRAs, keeps a central record that can be reused across SEBI-registered intermediaries. It does not guarantee returns, set fees or rate portfolios.

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