KYC (Know Your Customer) is a critical part of financial investments. The SEBI guideline and the Prevention of Money Laundry Act, 2002, have made it necessary for the funds companies to undertake the KYC compliance. It is important for preventing fund houses from being used, intentionally or unintentionally, for illegal transactions. Related procedures also enable the houses to better understand their customers and their financial dealings. So, you need to be KYC verified to be able to invest in mutual funds in India.
What is a KYC in mutual Funds
If you are an investor trying to avail financial services, then you need to be KYC verified. Similarly, to invest in mutual funds in India you need to be compliant with the guidelines. It helps fund houses verify the identification, job status, financial status, and other details. A person is shown compliant when required government-issued documents have been submitted.
Why is it Necessary
It was introduced to establish reliability, making the exchanges more uniform. Also, because it is a single identification database validated by the government of India, it also makes transactions much more secure. Therefore, it helps make your mutual funds investment process much smoother.
Transactions That Need KYC Registration
KYC is applicable for all types of mutual fund transactions:
- Fresh purchases
- Switch transactions
- Additional allocations
- New Systematic Investment Plan (SIP) registrations
- MICRO SIP registrations
- New Systematic Transfer Plan (STP) registrations
Also note that you might need to go through the process again, if there is a change in your address, telephone no., or nomination details.
How to Check Mutual Funds KYC Status
You can check your status through any of the KYC Registration Agencies (KRAs) websites. You can visit any of the registered agencies on the internet. For instance, CVL KRA, NDML KRA, DOTEX KRA, etc.
To check your mutual funds KYC status visit any of the registered KRA websites from which you have generated your ID. Input your PAN info to find out your mutual funds status. If the status shows “In process”, “Verified” or “New KYC registered”, you can start your mutual fund investment journey. However, if the status shows “invalid data”, you need to start the process again.
Registration for First-Timers
In case you have not been registered or due to some reason the process could not be completed, you should keep all the documents handy. Along with the downloaded KYC form, you should have self-attested copies of PAN card, Aadhar card, passbook, latest electricity bill or telephone bill or passport for address proof. Other documents that are also acdeptable include rent agreement, driving license, ration card, latest DEMAT account statement, etc. In case, you need to register you will require all the aforementioned documents along with the filled KYC form.
Please note that KYC norms are applicable for all investors, including the joint-holders and existing investors. This is true for all SEBI-registered mutual funds in India, irrespective of the amount invested.