The Securities and Exchange Board of India (SEBI) mandates KYC (Know Your Client) compliance for investors before they can initiate investments in mutual fund schemes.What is the Process for Completing KYC Before Starting MF Investments?To open a folio for mutual fund investments, investors need to complete a KYC form and submit valid Proof of Identity (POI) and Proof of Address (POA) documents as required. The fund house or a SEBI-registered entity (SRI) will then open an account and register these documents with one of the KYC Registration Agencies (KRAs), if they are not already recorded in any KRA database. Valid POI documents include Aadhaar, passport, driving licence, voter ID card, NREGA job card, or any other document specified by the Union government in consultation with the regulator. It's important to note that starting from April 1, bank statements or utility bills will no longer be considered valid documents for completing the KYC process.Can KYC be Done via Digital Mode?Investors can complete their KYC online without visiting a fund house, registrar, or distributor by using Aadhaar-based e-KYC. This eliminates the need for physical in-person verification. Investors can log onto the mutual fund website, registrar's website, or third-party distributor websites authorized for mutual fund investments to complete their KYC. Authentication of investor credentials is done by sending an OTP to the mobile number registered with Aadhaar. Additionally, investors need a mobile device with permissions enabled for camera, location, and microphone access. They also need to upload a self-attested copy of PAN and an image of their signature on plain paper to finalize the process. Once KYC is completed, investors can start investing in mutual funds.What Should Investors Who Completed KYC with Bank Statements or Utility Bills Do Now?Investors who completed their KYC using invalid documents such as bank statements or utility bills and wish to open a new account or folio must undergo a fresh KYC process. They need to physically submit these documents to a registrar to comply with current norms. However, investors whose KYC records are validated with PAN-Aadhaar seeding, and whose email and mobile number are verified by the KRA, can continue transactions in the securities market with their existing intermediary. This includes maintaining systematic investment plans, systematic transfer plans, or making withdrawals or redemptions from existing folios.Why is it Important to be KYC-Compliant Even for Old MF Investments?Many investors entered mutual funds when KYC compliance was not mandatory. It's crucial for such investors to understand that no new investments will be accepted without current KYC compliance. Regulations now require investors to be KYC-compliant not only at the time of investment but also when making redemption requests. In cases where a folio has multiple holders, all must be KYC-compliant. Similarly, in the event of the death of a unitholder, the beneficiary or nominee must also be KYC-compliant for the transmission of units.
