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Mutual Funds: New KYC norms for investors take effect from 2024-25; here’s what you need to know

Mutual fund (MF) investors who invested before the advent of the now ubiquitous Aadhaar by submitting bank account statements or utility bills as proof of address but have failed to update the 12-digit digital national identity number in their individual folios better watch out.
If you have not submitted information about your Aadhaar, you would not be able to buy new MF units. Investors have to mandatorily get their KYC (Know Your Customer) done through Aadhaar to buy MFs from 2024-25.

With the new set of rules stipulated by markets regulator SEBI on KYC (Know Your Customer) becoming effective from April 1 for MFs, investors have to check the status of their compliance with KRAs (KYC Registration Agencies) such as CAMS (Computer Age Management Services) to continue their investments and redemptions.

Check your KYC status first
Investors have to check the status of their KYC first. They can do this by logging into the website of KRAs such as CAMS, Karvy, CVL and NDML. The KYC status has been classified under three levels—KYC status is on hold, KYC is validated and KYC is registered or verified. Here are the links to do KYC.

If the KRA says your ‘KYC status is on hold’
This means that all financial transactions, including in existing schemes, will be restricted. The investor has to redo the KYC process by submitting any of the officially valid documents (OVDs) that includes Aadhaar, Passport and Voter ID card to the nearest branch of the AMC (Asset Management Company) or KRA.

KYC is registered or verified
This status implies that you had done your KYC with your Aadhaar card that did not have a QR code, any other OVD or a valid deemed OVD. In this case, you can continue to transact in your existing MF schemes but have to redo the KYC using any of the OVDs to invest in new schemes.

Please do note that if the KYC is done through Aadhaar, there is no need to repeat the KYC process for fresh transactions. If the new KYC is done through non-Aadhaar OVD, investors have to do a fresh KYC verification each time she/he applies for a new scheme.

Source: Mint, 10, May, 2024

Saturday, May 11, 2024