If you want to invest in mutual funds, you will have to complete the know your customer (KYC) procedure. Every investor is required to complete the procedure, which is mandatory and one-time. The Prevention of Money Laundering Act (PMLA) regulates the KYC norms, which are essential for tracking the legality of the money invested in mutual funds.
You need to submit your identity details to the fund houses before investing in mutual fund schemes. The asset management companies (AMCs) formulate different regulatory guidelines and implement the customer identification procedure in accordance to the PMLA. These regulations are periodically updated by the Securities and Exchange Board of India (SEBI).
You will have to fill out the KYC form. This form is easily available from the AMC’s website. Alternatively, you may acquire the form from an agent or broker. Along with the duly completed form, you need to submit self-attested copies of certain KYC documents as listed below:
- Identity proof
- Aadhar card
- Address proof
- PAN card
Procedure for KYC
You may download the KYC form from the website of any fund house or the registrar and transfer agent (RTA) or the Association of Mutual Fund (AMFI). There are four RTAs in India that also service mutual funds and handle client queries. You may submit the duly completed form to the fund houses or the RTAs. It is important that you carry the original documents along with the copies for in-person verification while submitting the KYC form.
If you do not want to visit the branch of an AMC or an RTA physically, you may complete the KYC form online. It is a paperless procedure and is completed without any difficulty. However, to complete the eKYC, you need your Aadhar number. After finalizing the mutual fund house, you may visit the website and commence the Aadhar-based eKYC. You need to enter your PAN and select the not-KYC compliant option. In the next step, you enter your details, such as your contact number and other information. You must enter the one-time password (OTP) received on your cell phone to complete the KYC procedure.
However, when you opt for the eKYC procedure, you need to bear in mind that you may invest only INR 50,000 per annum in the mutual funds. To increase the investment limit, you are required to do an offline/ physical KYC verification or opt for the third option, which is the biometric method. An in-person verification or biometric authorization is required to increase the investible amount limit in case you opt for the eKYC option.
A third way to complete your KYC is using your Aadhar number. You may visit any CAMS branch or complete it through your financial advisor or distributor. The distributor will bring a fingerprint device and a mobile phone and attach these two. Your thumb will be scanned on the device, which will later be connected to the Aadhar database using your fingerprint. The distributor also inputs some personal details. When the thumb impression matches the Aadhar database, your picture will be displayed on the cell phone, which completes the KYC for mutual fund procedure and you may begin investing in funds.
KYC is compulsory for every investor, including joint and existing investors if you want to invest in SEBI-approved mutual fund houses. It is a one-time procedure and once done, you may invest in one or more fund houses. Moreover, the entire procedure is available at no cost to you.
“Mutual Fund investments are subject to market risks, read all scheme related documents carefully.”