Mutual funds have given their distributors one more month to comply with stringent identity verification norms wherein agents are required to get biometric cards that carry information like finger-print impressions.

Market regulator Sebi in September 2010 ushered in a major overhaul of the way mutual funds were sold with the introduction of biometric cards and stringent licencing norms for distributors to weed out agents indulging in frauds.

As per the Sebi direction, all fund houses were asked to comply with 'Know-Your-Distributor (KYD)' norms before the grant or renewal of registration of distributors.

While the norms were implemented for new distributors with effect from September 1, 2010, the existing distributors were required to comply with the new requirements by February 2011.

However, the mutual fund industry body AMFI has now extended this deadline by one month and asked the existing distribution registration holders to comply with the new KYD norms by the end of March.

The distributors and some fund houses, too, were not very keen on the new set of rules and had been lobbying hard for its annulment, said an official at a leading fund house.

The fund houses and distributors were hopeful of some reprieve after U K Sinha, formerly chairman of Amfi and chief of fund house UTI MF, became the Sebi chairman last month.

The new requirements have not been done away so far, but AMFI has now extended the deadline for completing KYD process by existing registration by one month.

The fund houses would suspend payment of commissions to distributors not completing the KYD process by March 2011.

The agents would be required to get biometric cards that would carry an impression of their right hand index finger and help in immediately checking the distributor's record for any possible irregularities in the past.

The KYD norms, devised on the lines of KYC (Know-Your- Customer) norms followed by banks and other financial service providers, would require distributors to submit identity and address proofs, PAN and bank account details.

Besides keeping a check on agents indulging in fraudulent activities, the move is also aimed at weeding out non-serious agents and those indulging in mis-selling activities.

There are more than one lakh distributors working for about three dozen fund houses in the country.

Previously, grant of registration needed a certificate for having passed an AMFI certification examination, two photographs and payment of a registration fee.

However, pursuant to a directive from market regulator SEBI, the AMFI certification has been replaced by a certification programme for distributors conducted by the National Institute of Securities Markets (NISM). .