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Mutual Fund KYC with bank statement, utility bill now invalid: Details here

From April 1, the range of documents accepted for proof of identity or address will be more limited, impacting both new and existing investors

mutual fund equity market

Illustration: Binay Sinha

Surbhi Gloria Singh New Delhi

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The Securities and Exchange Board of India (Sebi) has announced a major change in the Know Your Client (KYC) documentation required for mutual fund investments. From April 1, the range of documents accepted for proof of identity or address will be more limited, impacting both new and existing investors.

Mandatory KYC compliance

If you are a mutual fund investor, then you are now obliged to complete KYC formalities before proceeding with your investments. This entails filling out a KYC form and providing valid proof of identity (POI) and proof of address (POA) documents, which are subsequently registered with a KYC Registration Agency (KRA) by the mutual fund house or a Sebi-registered entity.

Accepted POI documents are
— Aadhaar
— Passport
— Driving licence
— Voter ID card
— NREGA job card
— Any other document sanctioned by the Centre in agreement with the regulator.

Changes in acceptable documents

Investors, note: Bank statements or utility bills no longer serve as acceptable documents for KYC completion. This shift in policy was communicated to Mutual Fund Distributors (MFDs) via emails from registrar and transfer agents such as CAMS (Computer Age Management Services) and KFin Technologies in early March.

Impact on existing investors

For those who have previously used bank statements or utility bills for KYC and are looking to open a new account or folio, a fresh KYC process adhering to the new guidelines is mandatory. On the other hand, investors with KYC records validated through PAN-Aadhaar linkage and verified email and mobile numbers can continue their transactions in the securities market with their current intermediary.

It's important for all investors, including those with older mutual fund investments made prior to the mandatory KYC requirements, to ensure they are KYC compliant. Failure to comply prevents new investments and redemptions, with all folio holders required to meet these standards.

Benefits of online KYC

Investors have the advantage of completing their KYC digitally through Aadhaar-based e-KYC. This process involves an OTP verification sent to the mobile number linked with Aadhaar and requires a mobile device with camera, location, and microphone access. Uploading a self-attested PAN copy and a signature image is also part of the digital KYC procedure.

Towards a uniform KYC system

The Financial Stability and Development Council (FSDC) is advocating for a unified KYC system across the financial sector, aiming to streamline and economise the verification process. An expert committee led by Finance Secretary TV Somanathan is set to recommend norms for this unified approach, potentially simplifying compliance for investors and institutions alike.

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First Published: Apr 03 2024 | 4:52 PM IST

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