Things you should know about KYC

What are KYC norms?

'Know Your Client', which is commonly referred to as KYC, is a term used for the client identification process by mutual funds, banks, insurance companies, etc. In the case of mutual funds, the market regulator, the Securities and Exchange Board of India (SEBI), has prescribed certain requirements relating to KYC norms. This is in the form of verification of identity, address, providing information of financial status, occupation and other demographic information. An applicant must be KYC compliant to invest in a SEBI registered mutual fund. This rule was first initiated on February 1, 2008 and was compulsory for investors investing Rs 50,000 or more in mutual funds. However, from January 1, 2011, SEBI has made it mandatory for all mutual funds investors to be KYC compliant irrespective of the amount invested.

This rule was first initiated on February 1, 2008 and was compulsory for investors investing Rs 50,000 or more in mutual funds. However, from January 1, 2011, SEBI has made it mandatory for all mutual fund investors to be KYC compliant irrespective of the amount invested.

Where can investors get KYC forms and what are the documents required for KYC?

Investors can download KYC forms from websites of mutual funds, CVL and AMFI. Investors need to provide proof of identity like a PAN card copy, passport copy, driving licence copy, etc and proof of address.

Where can the KYC forms to be submitted?

The Association of Mutual Funds in India (AMFI) has facilitated a centralised platform through CDSL Ventures Ltd (CVL) to carry out the KYC procedure on behalf of all mutual funds. CVL through its points of service (PoS) will accept KYC application forms, verify documents, and provide the KYC acknowledgement across the counter on a best effort basis. The PoS list is available on the websites of mutual funds, CVL and AMFI.

How does an investor transact in mutual funds after completing the KYC process?

Once the KYC is completed, the investor needs to produce a copy of the acknowledgement while making the first investment in every folio in each mutual fund house. There is no need to repeat the KYC process for each mutual fund.

Does the KYC acknowledgement have an expiry date?

No. Once the KYC acknowledgement is obtained and informed to a mutual fund house, it will be registered against the folio and quoted in all future account statements. The same will exist in perpetuity, unless cancelled by CVL. In case, the investor needs to change the address, they needs to submit the new address proof with the KYC slip to any PoS.