New KYC guidelines MF investors need to know

Tags: Mutual Funds

Investors must proactively check if they need to update anything in their KYC records

The know your client (KYC) norms for mutual funds (MFs) have once again undergone changes. Investors won’t be able to put additional or new money into mutual fund schemes or may even be restricted from making transfers from one fund to another unless these norms are complied with. Investors need to know that there are now additional conditions that investors will have to fulfil.

Complete KYC

One big change new and existing investos should notice is that they can’t invest in a MF scheme if their KYC process is not complete. They will have to finish the entire process before making investments. At present, in cases, where the status of the investor shows that his/her KYC is under process or put on hold, the MF house allows investors concerned to make the investment.

The main point here is that investment can continue while the problems are dealt with. This won’t be possible any more. Investor will now first have to sort out all the issues and obtain an ‘all clear’ KYC status; only then he/she will be allowed to make investments into a scheme.

Income/networth

There are a few additional things that investors need to understand. First, they will have to give all additional details about themselves, including the income they earn or their networth. This is an additional detail that the new norms mandate. It is likely that existing investors might not submitted this information before. Secondly, investors will also have to inform their respective fund houses whether they are politically sensitive persons or not.

In person verification

Another aspect that investors must pay attention to is that till some time ago there were no requirements for person verification. Now there is. So, those who completed their KYC process earlier without any such verification will now have to complete the procedure. The process involves actually being present in front of the authority that would verify that the individual who is investing is the same as the person that is known to them, verified by a physical presence.

So instead of waiting for the next investment opportunity, the investors must proactively check if they need to update anything in their records and act accordingly.

(The writer is a CA and a certified financial planner)

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