Mutual Fund KYC

Starting from the 2024-25 fiscal year, investors must update their KYC information with Aadhaar to purchase new mutual fund units, as per SEBI regulations.
Mutual Fund KYC
3 mins read
31-May-2024

Starting from the 2024-25 fiscal year, mutual fund investors will be required to update their KYC information with their Aadhaar in order to buy new mutual fund units. This is mandated by SEBI. It's crucial for investors to verify their KYC status with KYC Registration Agencies (KRAs) such as CAMS, Karvy, CVL, and NDML to ensure uninterrupted access to mutual fund investments.

Investors who initially invested before the widespread use of Aadhaar, providing bank account statements or utility bills as proof of address, must now update their KYC details with their 12-digit Aadhaar number. Failure to update this information will prevent investors from purchasing new mutual fund units.

To comply with these new regulations, investors must complete their KYC process using Aadhaar starting from the 2024-25 fiscal year.

In this article, you will learn about mutual fund KYC process, mutual fund KYC online and offline and many more in detail.

What is the KYC process in mutual funds?

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.

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Mutual Fund KYC - Latest Update in 2024

Here are some lates updates regarding mutual Fund KYC as per SEBI:

  • According to the latest SEBI regulation, investors who completed their original KYC using their Aadhar Card are exempt from re-KYC.
  • However, all Mutual Fund investors need to update their KYC by March 31, 2024, if it was not initially done with an officially valid document (OVD) like a passport, driving license, or voter ID card.
  • Previously, utility bills were accepted as address proof for KYC, but the norms have been revised, requiring documents like passport, driving license, or voter ID card.
  • If your original KYC was based on an OVD other than Aadhar Card, your existing investments remain unaffected, but you'll need to redo KYC to invest in a new fund house.
  • Investments made through passport, driving license, or voter ID-based KYC won't be impacted, but those based on utility bills might face restrictions.
  • Therefore, updating KYC before April 1, 2024, is crucial for uninterrupted transactions and investments.
  • To determine if KYC needs to be redone, investors should first check their KYC status.

Can I do KYC online for a mutual fund?

Investors have the option to complete their KYC (Know Your Customer) process online via any mutual fund's official website. According to the Association of Mutual Funds in India (AMFI), individuals can navigate to the 'Modify/Update KYC' section on the respective mutual fund's website. Here, they can proceed by entering personal details and uploading necessary documents as per the provided instructions.

How to do KYC for mutual fund online

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.

How to do KYC for mutual fund offline

Here are some details regarding how to do KYC for mutual funds offline:

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

Also read: What is CAMS KRA

How NRIs can update KYC status for mutual fund investments?

Non-Resident Indians (NRIs) can update their KYC status for mutual fund investments through a straightforward process. Firstly, they need to obtain and fill out the KYC application form, which is available on the websites of mutual fund companies or KYC registration agencies. The form requires personal details such as name, address, date of birth, and PAN number.

Next, NRIs must submit the completed form along with the necessary documents. These documents typically include a copy of the passport, a recent photograph, proof of overseas address, and a copy of the PAN card. Additionally, NRIs may need to provide proof of their NRI status, such as a copy of their visa or work permit.

The documents must be attested by authorised entities like the Indian Embassy, Consulate, Notary Public, or officials from overseas branches of scheduled commercial banks registered in India.

Once the form and documents are duly filled and attested, NRIs can send them to the designated KYC registration agencies. These agencies verify the details and update the KYC status. Upon successful verification, the updated KYC status allows NRIs to continue investing in mutual funds seamlessly. It is advisable to check specific requirements with the mutual fund company or KYC registration agency to ensure compliance with all regulations.

Important things to keep in mind

Double-check your KYC update!

  • Ensure all proofs and information you submit for your KYC update match exactly. Any discrepancies can lead to rejection and delays.

KYC Update - One Stop Change

  • Investing through SIPs or lump sums across different fund houses? Updating your KYC with one fund house will automatically update your details across all.

Be Patient - KYC Update Takes Time

  • Allow 7 to 10 business days for your updated KYC details to reflect in your mutual fund account.

Proof for Residential Status & Nationality Change

  • If your residential status or nationality changes, you'll need to submit your passport as proof during your KYC update.

Documents required for Mutual Fund KYC

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.

Read also: How to Check Mutual Fund Status with Folio Number

Types of KYC status in 2024

  • Validated: KYC done with Aadhar and is up to date. You can continue investing and redeeming funds.
  • Registered: KYC done with an OVD but not Aadhar and your contact information is up to date. You can continue investing with your current mutual fund houses but not new ones.
  • On Hold: KYC done with a non-OVD or your contact information is not up to date. You cannot invest in any mutual funds until you fix the issue.
  • Rejected: KYC was on hold for too long and now cannot be used. You cannot invest in any mutual funds until you redo your KYC.
  • Needs Re-KYC: KYC needs to be updated. You can use Aadhar or an OVD but redo your KYC every time you invest with a new mutual fund house.

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.

Read also: How to Choose Mutual Funds to Invest

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

What is importance of KYC using Aadhaar?

KYC (Know Your Customer) is a mandatory process for investing in mutual funds. It helps prevent financial fraud and money laundering by verifying your identity and address. Using Aadhaar for KYC simplifies the process. Instead of submitting physical documents, your information is electronically verified against Aadhaar data. This saves time, reduces paperwork, and ensures greater accuracy. Additionally, Aadhaar-based KYC eliminates the need for repetitive submissions across different fund houses.

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.

What is the last date for mutual fund KYC?

There's no specific deadline set by regulators for KYC in mutual funds. However, KYC is mandatory for any investment in mutual funds. If your KYC isn't complete, you won't be able to invest or transact in your existing mutual fund holdings. This can lead to delays and missed investment opportunities. It's best to complete your KYC as soon as you decide to invest in mutual funds to avoid any hurdles.

How can I check my MF KYC status?

There are two ways to check your KYC status for mutual funds:

  • KRA website: Visit the KYC Registration Agency (KRA) website ([invalid URL removed]) and use the "Check KYC Status" option. You'll need your PAN details to access your KYC information.
  • Mutual Fund Provider Portal: Most mutual fund houses offer online portals where you can check your KYC status. Look for a dedicated section for KYC verification or investor profile within your online account.
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 is absolutely mandatory for investing in mutual funds in India. SEBI (Securities and Exchange Board of India) regulations require all financial institutions to perform KYC on their clients. This helps regulate the financial system, prevent money laundering, and protect investors from fraudulent activities. Without a valid KYC, you won't be able to invest in any mutual funds, even directly or through SIPs (Systematic Investment Plans).

How long does mutual fund KYC take?

The KYC verification process for mutual funds is generally quite fast, especially if you use Aadhaar for verification. If your details match your Aadhaar data, verification typically takes 1-3 business days. In some cases, where details need manual verification or additional documents are required, it may take longer. It's always best to initiate your KYC well in advance to avoid any delays in your investment plans.

What is CKYC and how does it relate to mutual fund KYC?

CKYC (Central KYC) is a centralized KYC process managed by the KRA. When you undergo CKYC verification with one financial institution, your KYC details are uploaded to a central repository. This eliminates the need for repetitive KYC submissions across different financial institutions, including mutual fund houses. Once your CKYC is done, you can simply provide your KYC reference number when investing in mutual funds with different providers.

How do I activate my KYC for mutual funds?

KYC doesn't require any specific activation process. Once your KYC details are verified by the authorities, it becomes valid across all KYC-compliant financial institutions in India. There's no need to activate it separately for each mutual fund house. However, you may need to link your KYC details to your investment accounts with different fund houses.

Can I invest in mutual funds without KYC?

No, there is no legal way to invest in mutual funds in India without completing your KYC. KYC is a mandatory regulatory requirement to ensure a safe and transparent financial system. If you attempt to invest without KYC, your transaction will be rejected.

What documents are required for mutual fund KYC?

The documents required for KYC in mutual funds can vary slightly depending on the specific KYC Verification Agent (KVA) or mutual fund house. However, the most common documents required include:

  • PAN Card: This is the primary identification document used for KYC verification.
  • Proof of Address: Documents like utility bills, bank statements, or passport with address can be used.
  • Identity Proof (if not using Aadhaar): Voter ID card, passport, driving license, etc. can be used for identity verification.
Is there a way to invest in mutual funds without KYC?

Unfortunately, there's no legal way to invest in mutual funds in India without completing your KYC. KYC is a crucial safeguard against financial crime and protects both investors and financial institutions. It's a quick and straightforward process, and most importantly, it helps ensure a secure and transparent investment experience.

What is the new KYC requirement for mutual fund investors starting from 2024-25?

From 2024-25, mutual fund investors must link their Aadhaar with their KYC to comply with updated regulations. This mandate ensures that all investors' identities are verified and reduces the risk of fraudulent activities. Investors need to update their KYC details with their Aadhaar number through KYC Registration Agencies (KRAs) to continue investing in mutual funds seamlessly.

Why is it important to check my KYC status with KRAs?

Checking your KYC status with KRAs ensures that your information is accurate and up-to-date, allowing for smooth and uninterrupted transactions in mutual funds. It helps in identifying any discrepancies early, ensuring compliance with regulatory requirements and avoiding potential issues in your investment process, such as delays in processing transactions or restrictions on your account.

What happens if I have not submitted my Aadhaar information?

If you have not submitted your Aadhaar information, your KYC status may be considered incomplete, which can lead to restrictions on your mutual fund transactions. This can include limitations on new investments, redemption, or other fund-related activities. It is crucial to provide your Aadhaar details to ensure your KYC is fully compliant with the latest regulations.

Can I still redeem my investments if my KYC is not updated with Aadhaar?

If your KYC is not updated with Aadhaar, you may face restrictions on redeeming your investments. Regulatory compliance requires a complete KYC process, including linking Aadhaar. Without updating your KYC with Aadhaar, mutual fund companies might restrict your ability to redeem or make new investments, leading to potential financial inconvenience.

How do I complete the KYC process?

To complete the KYC process, fill out the KYC application form available from mutual fund companies or KYC Registration Agencies (KRAs). Submit the form along with required documents such as a copy of your PAN card, address proof, and Aadhaar card. Ensure the documents are attested by authorised entities. Submit these to the KRA for verification. Once verified, your KYC will be updated.

What should I do if I face issues with updating my KYC?

If you encounter issues with updating your KYC, contact your mutual fund company or the KYC Registration Agency (KRA) for assistance. They can provide guidance on the necessary steps and documents required. Additionally, ensure all documents are correctly filled and attested. If problems persist, seek help from financial advisors or customer service representatives for resolution.

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Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.