Do you need to redo your mutual fund KYC? It depends on your KYC status

Once you know your KYC status, you can update it online on any of the fund house websites or submit a physical KYC form to one of the fund houses.

The April 1 deadline for mutual fund (MF) investors to redo their KYC (know your customer) compliance if they did not meet certain conditions has passed. But the confusion around it has not.

Failure to redo KYC, where needed, can debar an investor either from investing with a new fund house (that is, one in which they currently have no investments) or worse, from carrying out any transactions even with their existing MF investments.

Commenting on why there’s confusion over redoing KYC, Abdulla Chaudhari, Head of Investor Services at Edelweiss Mutual Fund, says this is because people haven’t tried to do so and there is a lack of awareness on what documents are needed. He says the KYC can easily be redone online on the websites of most fund houses.

First check your KYC status

For investors who are still wondering whether they need to redo their KYC or not, the answer lies is what their KYC status is.

To check your status, you can start with CVL KYC Registration Agency (KRA), which is the agency used by the majority of investors, or else try NDML KRA, CAMS KRA or Karvy KRA.

For details on what the different types of KYC statuses mean, see the graphic.

Alongside, you also need to ensure that your contact details—mobile number and email ID—have been validated by one of the KYC registration agencies or KRAs.

For more details on the mutual fund re-KYC issue, read our earlier FAQs.

Updating your KYC

Once you know your KYC status, you can update it online on any fund house's website or submit a physical KYC form to one of the fund houses (see graphic). The updated KYC will reflect in all your MF investments across all fund houses.

Citing the example of Edelweiss MF, Chaudhari explains how an investor’s KYC will get updated online: “If you are an existing investor of Edelweiss MF, you can log in to your account and under the profile section, you will be guided on how to modify your KYC if it shows as ‘registered’ or ‘on hold’. You will have to upload your mAadhaar or e-Aadhaar from your DigiLocker account. This information will then get validated from the UIDAI and your KYC status will get updated.”

Note that if your KYC status is ‘registered’, you can continue with your existing fund houses, but you cannot invest with a new fund house until you redo your KYC. “If you go to another fund house, they will check your KYC status at the time of account opening. If your status shows as ‘validated’, your investment will go through. If it shows as ‘registered’, you will be prompted to redo your KYC with Aadhaar,” says Chaudhuri.

Another fund house we spoke with provided a similar explanation for the online KYC process.

While you can also do a physical KYC, fund houses we spoke with said that when you submit a physical copy of your Aadhaar card, the QR code on it may have faded over time. This can make it difficult for the KRA to verify the Aadhaar card with the UIDAI, which may result in your KYC not getting updated. The online KYC is likely to be more seamless.

It’s not easy for NRIs

Compared to resident Indian investors, the situation gets more complex for NRIs. If you are a non-resident Indian with a non-Indian mobile number, you will not be able to receive an OTP on your mobile number to validate it. As a result, your KYC status will show as ‘registered’ (and not ‘validated’).

That means, you can continue to transact with the existing fund houses that you already have investments in. But, you will not be allowed to transact with any new fund house unless you redo your KYC once with Aadhaar or, with another valid document (see graphic) every time you invest with a new fund house.