Mutual fund KYC norms: Capital market regulator SEBI from April 1 brought in fresh regulations for KYC process for mutual fund account holders. Under the new norms, asset management companies (AMCs) will have to update KYCs of mutual fund subscribers with Aadhaar and PAN. This directive is applicable to both new and old mutual fund folios.
As per news reports, 13 million accounts have been blocked where KYC updates are incomplete. That implies that the investors or mutual fund subscribers need re-KYC formalities as these subscribers failed to provide Aadhaar details or officially valid documents (OVDs) at the time of registration.
Sebi, it is directive, said that from April 1, investors with an ‘on hold’ KYC status will not be able to carry out any transactions in mutual funds. This includes investing in new mutual funds or redeeming units from existing mutual funds.
Read More: LIC Claims Settlement Procedure: 8 Key Things You Want To Know About Maturity Claims
What does ‘on-hold’ KYC mean?
As per Sebi, under the new norms the KYC status will be displayed as ‘on hold’ if the documents submitted during the initial KYC process do not qualify as official valid documents, such as a voter ID card or passport.
Instead, if documents like bank statements, electricity bills, or other utility bills are provided, this status may be applied.
Additionally, an ‘on hold’ status may result if there is a failure to validate the investor’s mobile number and email ID.
Documents that are not applicable for KYC compliance
As per Sebi regulations, utility bills and bank account statements are no longer considered valid documents for KYC compliance. This decision has been made in order to strengthen the KYC process and ensure the authenticity of the information provided. It is now mandatory for individuals to update their KYC with both their PAN card and Aadhaar card, and to link the two documents together.
This new requirement is a result of the discovery that many KYC records did not have the necessary PAN and Aadhaar information, leading to a need for reclassification of KYCs under different categories. By ensuring that KYCs are updated with the required information, Sebi aims to enhance the security and integrity of the financial system.
Other Mutual fund KYC statuses
> KYC Validated
If you see ‘KYC Validated’ status, the documents you submit are authenticated by the issuing authority. Provided there are no alterations to the information contained within these documents, a mutual fund investor is afforded the convenience of investing in any mutual fund scheme without further complications. At present, only PAN and Aadhaar details are eligible for verification directly from their respective issuing sources.
Therefore, individuals who have submitted their PAN and Aadhaar for KYC purposes are likely to have their KYC status approved swiftly, enabling them to invest across various mutual fund companies seamlessly.
> KYC Registered/Verified
If you see KYC Registered/Verified, it means the documents provided could not be independently verified from the issuing authority. This would mean that mutual fund investors can invest in any mutual fund house by producing the required documents again. That means, either the investor has given documenets like passport, voter ID card, etc., as proof of address and proof of identity for completing KYC process. Therefore, it has been the verification is not complete. Such individuals can undergo a re-KYC process by submitting PAN / Aadhaar to seamlessly invest in mutual fund schemes.
> KYC on-hold
This status means that KYC documents provided by the investor alongwith the mobile number and email ID of the mutual fund investors are not validated. Investors should note that all financial transactions, alongside select non-financial operations, will be temporarily suspended until the requisite documentation is provided.
This suspension includes ongoing SIP transactions and redemption processes among others. We appreciate your prompt attention to this matter to resume normal activities without delay.
How to verify your KYC status online
Investors may check the status of KYC compliance through the website of any of the KYC Registration Agencies (KRAs). Here are the 5 authorised KRAs – CVL KRA, NDML KRA, DOTEX KRA, CAMS KRA, and Karvy KRA.
Mutual fund subscribers can verify their KYC status online like this:
1: Visit a KRA website. For instance, go to www.CVLKRA.com or www.CAMSKRA.com.
2: On the homepage, look for “KYC Inquiry”.
3: You will be redirected to a new page. Here, insert details of your PAN, solve the captcha, and then press “Submit”.
4. After submission, your KYC status will appear on the screen based on the PAN details you entered.
5. You may see the KYC status as validated, registered, or on hold.
