SEBI may approach Finance Ministry to allow bank KYC as proof for MF investments

The Securities and Exchange Board of India has requested the Finance Ministry to allow bank KYC as proof for making mutual fund investments, according to sources in the MF industry.

A slew of fund houses had requested SEBI Chief to simplify onboarding of investors by allowing bank KYC and Aadhaar as valid identification to invest in mutual funds.

According to a CEO from a large fund house, SEBI is likely to request Finance Ministry for considering bank KYC and Aadhaar as valid KYC and In Person Verification to invest in mutual fund.

In a meeting held last month, mutual fund CEOs had requested SEBI Chief Ajay Tyagi to simplify customer onboarding of investors by allowing bank KYC and Aadhaar as a valid proof to invest in mutual funds, fund officials said.

“Currently, a PAN card is required, along with an address proof and a cancelled cheque to be KYC-compliant. Similarly, for opening a bank account, PAN card and address proof is required," the CEO quoted above said.

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But, Aadhar card holders have already undergone In Person Verification (IPV). So, there is no need to do KYC and IPV again. This is what we have requested SEBI," he said.

At present, a new investor has to wait for nearly a week after submitting the above documents to invest more than Rs 50,000 in mutual funds.

The ones who invest in mutual funds have a bank account so allowing bank KYC and Aadhaar as valid proof of KYC and IPV would make KYC procedure smoother and easier, which will reduce turnaround time to onboard a new client.

Although the government had launched Central KYC last year to do away with the requirement of doing multiple KYC, it will take time to get operational.