Sebi mulls uniform process for opening MF folios, first investments
Under the new proposal, first-time investments in newly created MF folios can only be made after KYC verification is completed by the KYC Registration Agency (KRA)
 "Sebi mulls uniform process for opening MF folios, first investments")
The Securities and Exchange Board of India (Sebi) has proposed a standardised process for opening mutual fund (MF) folios and executing the first investment. The move is aimed at addressing persistent Know Your Client (KYC) compliance and transaction hurdles faced by both investors and asset management companies (AMCs).
Under the new proposal, first-time investments in newly created MF folios can only be made after KYC verification is completed by the KYC Registration Agency (KRA), ensuring investor records are fully compliant before transactions begin.
AMCs will be required to update internal systems and workflows to align with the proposed process, and investors will receive notifications at every stage of the KYC process via email and mobile alerts.
Instances of folios being marked KYC non-compliant often result in blocked transactions, delayed redemption proceeds, and unclaimed dividends, prompting the need for this overhaul.
The proposed rules mandate that AMCs create folios only upon thorough KYC checks, send documents to KRAs for final validation, and permit first investments solely after KRA approval. This will help prevent investor confusion and operational delays.
Public comments on the draft process are invited until November 14.