How to do KYC for Mutual Funds
Recent media accounts reported that mutual fund industry now has over Rs. 23 trillion in Assets Under Management (AUM) in February 2019 alone. This could be considered to be a sign that an increasing number of people are taking financial planning earnestly and are setting distinct financial goals for their future.
With regards to secure investment schemes that provide above-average yields, mutual funds beat most other options to stand out as the emerging winner. Given the effortlessness through which one can invest in mutual funds, an upbeat market and a wide variety of mutual fund types make it an attractive investment proposition for new and seasoned investors alike. If you are looking to invest in mutual funds, first and foremost, it is essential to know that you can only invest in mutual funds if you are KYC compliant.
Understanding KYC for mutual funds
Know Your Customer, also known as KYC, enables financial institutions to validate your identity. As a first-time investor, you must undergo the KYC process before transacting in a mutual fund. Because it is a mandatory customer identification process, it is critical to submit your identity details to a mutual fund house, a stock broker like IndiaNivesh or any other financial institutions. This is because, according to the Prevention Of Money Laundering Act, 2002, AMCs must abide by the rules and guidelines established by the Act to implement a Customer Identification Proof.
Furthermore, there are specific requirements prescribed by SEBI concerning KYC norms of financial institutions and intermediaries to know their customers. KYC for mutual fund requirements are typically in the form of verifying the customer's identity and address, financial standing, occupation and vital demographic data. These rules and regulations are continually updated by SEBI periodically.
Valid from January 1, 2012, every investor regardless of the investment amount in mutual funds must comply with KYC to carry out any transaction. Since money laundering is a major issue worldwide, mandating KYC formalities is regarded as an efficient way of preventing illegal activity.
The chief objective of the KYC process is to ensure that a real person or individuals are making investments rather than fictitious names. Every mutual fund investor must adhere to the KYC procedure via a KYC Registration Agency (KRA). This information held by the agency is stored in a single repository for all fund houses and intermediaries to access. Examples of these agencies include NSE, CAMS and KDMS.
Documents required for KYC
To initiate your KYC process, you must submit the following documents along with the KYC application form and passport size photograph. Documents include:
• Identity proof such as driving license, passport copy, voter ID, Aadhar card, bank photo passbook, or PAN card
• Address proof such as recent landline or mobile phone, passport copy, electricity bill copy, voter ID, driving license or Aadhar card
Types of KYC procedures
Typically, you can complete the mutual fund kyc form either through the off-line or online method. CDSL Ventures Ltd has been nominated and authorised by the mutual fund industry to conduct the Know Your Customer procedure.
• Visit the CDSL Ventures website and download the KYC application form
• Fill in the details
• Submit the signed application form through the specified mutual fund authorities or intermediaries
• Provide identity proof and address proof and the passport size photograph to go along with KYC form
• The duly filled form can be physically submitted at any of the following places. These include the Asset Management Company (AMC) through which you are making the investment or the Registered Transfer Agent (RTA) such as CAMS.
• Create an individual account on the official website of the KRA. Fill in your credentials to initiate the online kyc for mutual fund
• Key in your registered mobile number and enter your Aadhar card number
• Verify the details through the OTP sent on your registered mobile number
• Upload a self-attested copy of your e-Adhaar
• Accept the consent declaration terms for the eKYC
Aadhar based KYC through biometrics
You can also opt for Aadhar based KYC if you have the Aadhar card. Request the fund house or agency to send their representative or an official to visit you personally and collect the details from you in person. You can submit a copy of your Aadhar card to the representative, and they will enter your biometric information on the scanner and link it to the Aadhar data repository. As your fingerprints get matched to the database, your credentials stored with the Aadhar database will reveal that your KYC has been validated. This process can ensure that you can go ahead with your mutual fund investment.
KYC for non-individuals
However, if the investor is not an individual, the KYC process must be completed in a different manner. For instance, here are some cases on how to complete the KYC based on the following:
• Joint applicants. All or both applicants in a joint applicant setting must complete the KYC individually.
• Power of attorney. The power of attorney holder and investor must complete the KYC process individually.
• NRIs/PIOs. All NRIs and PIOs must complete the KYC formalities individually.
• Minors. If a mutual fund investment is being made on behalf of a minor, the parent or legal guardian who wishes to operate the account on behalf of the minor must complete the KYC procedure. When the underage individual attains adulthood, he or she must complete the KYC formalities at the time.
It is important to note that if any KYC documents are found incorrect, insufficient or not in order, the investor's compliance status can get cancelled. Under such a situation, the investor is informed of the status by the relevant authority.
To know your mutual fund kyc status and the progress of your KYC process, you can check on the following websites. Here, it is important to note that you can visit any of the below sites depending on where you have given the KYC application form:
• CDSL Ventures Ltd. CVL - https://www.cvlkra.com/
• NSE (DotEx International) - https://www.nsekra.com/
• NSDL Database Management Ltd (NDML) - https://kra.ndml.in/
• CAMS - https://camskra.com/Home.aspx
• Karvy - https://www.karvykra.com/
To know more about your mf kyc status, you can visit any of the above sites and enter your PAN number.
On completing the KYC procedure successfully, you will be able to purchase mutual fund units from your respective AMC or RTA. You can freely invest in a wide variety of mutual funds of your choice and any amount, after completing your KYC formalities.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.