Mutual Fund KYC

Explore why Know Your Customer is crucial for a secure investment experience.
Mutual Fund KYC
3 mins read
19 Mar 2024

The term ‘KYC’ or Know Your Customer holds paramount significance when it comes to investments. It is a fundamental process that underpins the integrity and security of financial transactions across various sectors, including banking, insurance, and mutual funds. KYC serves as a foundational pillar of trust, ensuring transparency, regulatory compliance, and the prevention of financial crimes such as money laundering, terrorism financing, and fraud.

When it comes to mutual funds KYC, the significance becomes even more. Mutual funds, which pool money from numerous investors to invest in diversified portfolios of securities, operate within a regulated framework governed by regulatory authorities such as SEBI (Securities and Exchange Board of India). AMCs are entrusted with the responsibility of safeguarding investor interests, ensuring transparency, and maintaining the integrity of the investment process.In this article, you will learn about mutual fund KYC process, mutual fund KYC online and offline and many more in detail.

Why is mutual fund KYC compulsory?

To fight financial crime, regulations require investment firms to verify your identity (KYC). This helps prevent money laundering and fraud by ensuring everyone uses their real information. When a mutual fund company asks for your ID for KYC, it is simply confirming who you are. They also want to make sure your investment goals are legitimate and there are no red flags, like a history of not repaying debts.

How to get your mutual fund KYC done?

To complete your KYC you need to follow these steps:

  1. Submitting a duly filled KYC form with signatures and a photograph
  2. Providing one self-attested proof of identity (POI)
  3. Providing one self-attested proof of address (POA)
  4. Completing the in-person verification (IPV) through an authorised intermediary or agency

Offline KYC process for mutual funds

1. Offline KYC with KRA (CDSL Ventures Ltd.)

  1. Download the KYC application form from CDSL's website
  2. Fill in the details and attach attested photographs, ID proof, address proof, and PAN card copies
  3. Submit the completed application and documents to your chosen mutual fund house or intermediary at their office

2. Offline KYC with an intermediary/platform

  1. If you plan to invest through a specific fund house or investment platform, they will provide a KYC registration form if you aren't already KYC registered
  2. The fund house or investment platform is registered with a KRA, a KYC Registration Agency
  3. Fill out the form provided and submit it to the company to create your KYC for your PAN number with a KRA

Online KYC for mutual funds

1. Online KYC with KRA: Online KYC requires individual processing with the chosen mutual fund house, intermediary, or investment platform.

Unlike offline KYC, the online process involves filling out forms and uploading required documents digitally, eliminating the need for physical visits to offices.

  1. Visit the website of any KYC Registered Agency.
  2. Create an account and complete the online form with all necessary details.
  3. Provide your registered mobile number, PAN Card, and other identification details.
  4. Upload self-attested documents online.

Once you complete the KYC process through a KRA online or offline, you'll receive a KYC identification number, which you can share with your preferred investment platform to start investing.

2. Aadhaar-based KYC: Although providing Aadhaar for KYC is optional, many investors still prefer this method for completing their KYC requirements. Most fund houses and investment platforms offer an Aadhaar-based KYC system.

What are the documents required?

Here is the list of documents required to complete your KYC:

  • PAN card: Permanent Account Number (PAN) card is a mandatory document for Mutual Fund KYC. It serves as a primary identification proof for investors.
  • Identity and address proof: Investors need to provide self-attested documents such as Aadhaar card, passport, voter ID, driving license, bank account passbook with signature or any other government-issued identity and address proof for KYC verification.

How can I check my mutual fund KYC status?

To check the KYC (Know Your Customer) status for a mutual fund in India, you can follow these steps:

  1. Visit the KYC Registration Agency (KRA) website: There are several KRAs in India such as CAMS, Karvy, NSDL, and CDSL. You need to visit the website of the KRA where you completed your KYC registration.
  2. Navigate to the KYC status check section: Look for an option or section on the website labelled something like ‘Check KYC Status’ or ‘KYC Inquiry.’
  3. Enter your details: You will be prompted to enter your PAN (Permanent Account Number) or other identifying details like your name, date of birth, etc.
  4. Submit the details: After entering your details, submit the information as required by the website.
  5. View your KYC status: Once you submit the details, the website will display your KYC status. It will typically show whether your KYC is verified, under process, or rejected.

Importance KYC in mutual fund

Mutual fund KYC holds a critical role within the investment sphere, its significance being undeniable. Here is why it stands as a crucial component:

  1. Regulatory compliance: KYC stands as a mandatory regulatory measure by SEBI, ensuring adherence to stipulated rules and guidelines for all mutual fund investors. Non-compliance may lead to legal repercussions.
  2. Risk evaluation: Through KYC, mutual fund firms assess an investor's risk profile, aiding in the recommendation of suitable investment avenues. This facilitates a higher probability of attaining financial objectives.
  3. Investor safeguarding: KYC serves as a shield for investors, fostering transparency and accountability within the investment arena. It acts as a deterrent against fraudulent activities and ensures investors comprehend the financial products they engage with.
  4. Curbing money laundering: A key objective of KYC is to thwart money laundering endeavours and the utilisation of illicit funds in mutual fund ventures. This not only upholds industry integrity but also contributes to national security.
  5. Transaction streamlining: KYC streamlines the investment process, enabling investors to conduct transactions conveniently, including online purchases, redemptions, and scheme switches.
  6. Fostering trust: Completion of the KYC process augments an investor's financial credibility, fostering trust with financial entities and mutual fund establishments.

Conclusion

Mutual Fund KYC is a vital process that ensures transparency, security, and compliance in the mutual fund investment process. KYC is a one-time process and hence if an investor has done KYC with a SEBI registered intermediary, the client need not undergo the same process again with another intermediary. By completing the KYC process, investors contribute to maintaining the integrity of the financial system and protect their investments from potential risks.

With e-KYC, Bajaj Finserv provide an end-to-end online process to invest in mutual funds seamlessly within few clicks.

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Frequently asked questions

Can you explain the idea of Aadhaar based KYC?

Aadhaar-based KYC allows investors to complete the KYC process using their Aadhaar card as the primary identification document. It simplifies the KYC process for investors.

What is importance of KYC using Aadhaar?

KYC using Aadhaar enhances the efficiency of the verification process and provides a secure and reliable method for verifying investor identity. It also enables seamless integration with digital platforms for online transactions.

How the KYC is done with OTP verification?

KYC with OTP verification allows investors to complete the verification process using a one-time password (OTP) sent to their registered mobile number and e-mail ID. It adds an extra layer of security and authentication to the KYC process.

Why I still need in-person-verification to be done?

In-person verification (IPV) is required to ensure that the investor's identity matches the details provided in the KYC documents. It helps prevent identity theft and fraudulent activities by verifying the investor's physical presence.

What is the last date for mutual fund KYC?

The last date for mutual fund KYC varies depending on regulations and updates from regulatory bodies like SEBI. It's crucial to stay updated with current guidelines and ensure completion of KYC before investing in mutual funds.

How can I check my MF KYC status?

You can check your mutual fund KYC status by visiting the website of the KYC Registration Agency (KRA) where you completed your KYC registration. Enter your details like PAN or name to view your status. Various KRAs include CAMS, Karvy, NSDL, and CDSL.

What is KYC form in mutual fund?

A KYC form in mutual funds is a document used to collect essential information about investors to comply with regulatory requirements. It typically includes details such as name, address, PAN, and other identification information needed for KYC verification.

Is KYC mandatory in MF?

Yes, KYC (Know Your Customer) is mandatory for investing in mutual funds in India. It's a regulatory requirement imposed by SEBI to ensure transparency, prevent fraud, and comply with anti-money laundering regulations.

How long does mutual fund KYC take?

The duration for mutual fund KYC processing can vary depending on factors like the volume of applications, completeness of information provided, and efficiency of the KYC registration agency. Typically, it may take a few days to a couple of weeks for the KYC process to be completed.

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