Imagine you bought a new car on your birthday. You may be an extremely competent driver but that is not enough if you wish to take the car for a spin on the highway. For that, you need to have the right documents in place. Similarly, you may know all about mutual funds. But if you wish to invest, you need to be KYC compliant.
What is KYC?
KYC is an acronym for Know Your Customer. It is a process initiated by the Securities and Exchanges Board of India (SEBI) for proper identification of investors. This way, all financial institutions are aware of their clients.
How can you be KYC compliant?
1) Fulfil your KYC requirements
In order to get started, you need to fill in the KYC form. This form would be provided to you by the mutual fund house. In addition, you will also be required to submit a few documents.
2) In-person verification
Under SEBI rules, you can invest up to Rs 50,000 per year in a mutual fund with e-KYC using OTP verification process*. But if you were to invest a larger amount, you would have to undergo an in-person verification process. You can complete this process through your AMC or a distributor who is certified by the Association of Mutual Funds of India (AMFI).
3) Check if information is updated
Once you finish the formalities, you can check online if your data has been updated. Finding out your status is very simple. All you need to do is log into the KYC Registration Agency (KRA) website. Here, you will be asked to provide a few details such as your PAN number. If your details are updated, you get a message that you are KYC verified. After this, you can conduct transactions in mutual funds. If not, the status is shown as pending. In this case, you may have to wait until your information gets updated.
After the entire process is completed, you will be provided with a unique 14-digit identification number. This is known as your KIN or KYC Identification Number. So if you are not yet KYC compliant, it is best to get the process started as soon as possible. The sooner you get it completed, the faster you can start investing and accumulating wealth.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.