What is KYC?
KYC is an acronym for “Know Your Client”, a term commonly used
for Client Identification Process. SEBI has prescribed certain requirements
relating to KYC norms for Financial Institutions and Financial Intermediaries
including Mutual Funds to ‘know’ their Clients. This would be in the form of
verification of identity and address, providing information of financial
status, occupation and such other demographic information. Applicant must be
KYC compliant while investing with any SEBI registered Mutual Fund.
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What
are the KYC requirements for a Mutual Fund Investor?
Individual investors will have to produce their Proof of identity (Photo PAN
card copy or PAN card copy and copy of the passport, driving license, etc.) and
Proof of Address (any valid documents listed in Section B of the KYC
Application Form for Individuals). Non-Individual Investors will have to
produce certain documents pertaining to their constitution/registration to
fulfill the KYC process. A list of Mandatory Certified Documents to be
submitted can be found in Section C of the KYC application form for
Non-Individual Investors.
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Where
and how does one get to be KYC Compliant? Does the investor have to repeat the
KYC process with every Mutual Fund?
The Mutual Fund Industry has appointed CDSL Ventures Limited
(“CDSL”), a wholly owned subsidiary of Central Depository Services (India)
Limited, to carry out the KYC compliance procedure. 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 list
of PoS will be displayed on the websites of Mutual Funds, CDSL and AMFI. Once
the KYC is duly completed in all respects, the investor needs to produce a copy
of the acknowledgement to the fund where the investor desires to invest. There
is no need to repeat the KYC individually for each mutual fund.
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What
is a KYC Application Form?
KYC Application Forms have been designed for Individual and
Non-Individual Investors separately. The soft copy of these KYC forms will be
made available on the website of all mutual funds, AMFI and Central Depository
Services (India) Limited (CDSL). You may also approach your distributor for a
form. It is important to read the instructions printed on the KYC Application
Form while filling-up the form.
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Should
the investor visit PoS personally to obtain KYC Compliance?
No. If the investor is not in a position to visit PoS
personally, the KYC Application Form along with the necessary documents
(including originals if the copies are not attested) can be sent through the
distributor or representative, who can arrange to fulfill the KYC obligation
and obtain the KYC Acknowledgement through any of the PoS.
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From
what date is it mandatory for an investor to be KYC Compliant?
Effective January 1, 2011, KYC Compliance is mandatory for all investors
irrespective of the amount of investment for the following transactions:
-
New/Additional Purchases,
-
Switch Transactions,
-
New Systematic Investment Plans registrations [including SIP related products]
received from effective date,
-
New Systematic Transfer Plan registrations [including STP related products]
received from effective date.
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To whom
is KYC applicable? Is there any exemption?
All individual investors except for investments through Micro SIP would be
required to quote their KYC Compliance status and attach a proof of the same
while making the application. KYC Compliance will also be required for
following where applicable:
-
Joint Holders: Joint holders (including first, second and third, if any) are
required to be individually KYC compliant before they can invest with any
Mutual Fund for e.g. in case of three joint holders, all holders need to be KYC
compliant and copies of each holder’s KYC Acknowledgement must be attached to
the investment application form with any Mutual Fund.
-
Minors: In case of investments in respect of a Minor, the Guardian should be
KYC compliant and attach their KYC Acknowledgement while investing in the name
of the Minor. The Minor, upon attaining adulthood, should immediately apply for
KYC compliance in his/her own capacity and intimate the concerned Mutual
Fund(s), in order to be able to transact further in his/her own capacity.
-
Power of Attorney (PoA) Holder: Investors desirous of investing through a PoA
must note that the KYC compliance requirements are mandatory for both the PoA
issuer (i.e. Investor) and the Attorney (i.e. the holder of PoA), both of whom
should be KYC compliant in their independent capacity and attach their
respective KYC Acknowledgements while investing.
-
Financiers will have to be KYC compliant at the time of Lien Marking.
-
For transmission (in case of death of the unit holder): If the deceased is the
sole applicant, the claimant should submit his/her KYC Acknowledgement along
with the other relevant documents to effect the transmission in his/her favour.
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How
does the investor transact in a Mutual Fund after completing the KYC process?
Investors must attach their KYC Acknowledgement along with the Investment
Application Form(s)/Transaction Slip(s) while investing for the first time in
every folio. Applications Forms/Transaction Slips not accompanied by KYC
Acknowledgement are liable to be rejected by the Mutual Funds. If you do not
obtain a KYC Acknowledgement, you will not be able to invest in a Mutual Fund.
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In
case of existing investors when and how will the KYC norms be introduced?
KYC norms are applicable to all investors. It is in the interest
of all Investors to obtain KYC Acknowledgement and submit it to the Mutual Fund
to avoid any inconvenience in future.
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Once
an account is opened with a Mutual Fund by 1st, 2nd and 3rd holder by
completing the necessary formalities, does the investor need to furnish the
necessary documents again?
Investors must attach their KYC Acknowledgement along with the
Investment Application Form(s)/ Transaction Slip(s) while investing for the
first time in every folio.
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What
are the consequences of KYC cancellation/rejection?
In the event of any KYC Application Form being found deficient
in terms of information / insufficiency of mandatory documentation, further
investments will not be permitted.
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Does
the KYC Acknowledgement have an expiry date?
No. Once the KYC Acknowledgement is obtained and informed to a
Mutual Fund, it will be registered against the folio and quoted in all future
account statements. The same will exist in perpetuity, unless cancelled by CVL.
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What
happens if I have multiple folios/ accounts with a Mutual Fund?
You can inform the Mutual Fund house to update the KYC Acknowledgement against
all the folios/accounts you have with them. However, each of the holders in
these folios/accounts should be KYC Compliant.
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Is
there a charge I need to pay to get myself KYC Compliant?
Currently KYC is being done free of cost.
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I
am an NRI residing outside India. How do I get myself KYC Compliant?
The soft copy of these KYC forms will be made available on the
website of all Mutual Funds, AMFI and Central Depository Services (India)
Limited (CDSL). You may also approach your distributor for a form. The same
duly completed along with the necessary attested documents can be submitted at
the PoS or mailed to your representative or Distributor who can complete the
KYC formalities for you.
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Are
there any special requirements for an NRI?
Yes. In addition to the certified true copy of the passport,
certified true copy of the overseas address and permanent address will also be
required. If any of the documents (including attestations/ certifications)
towards proof of identity or address is in a foreign language, they have to be
translated to English for submission. The documents can be attested, by the
Consulate office or overseas branches of scheduled commercial banks registered
in India
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Is
there any special requirement for a PIO (Person of Indian Origin)?
The requirements applicable to an NRI will also apply to a PIO.
However, additionally, he will need to submit a certified true copy of the PIO
Card.
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What
about a Minor attaining adulthood?
Upon a Minor attaining adulthood (i.e. on completing 18 years of
age), he/she must be KYC Compliant and have KYC Acknowledgement of their own.
The same should be informed to the Mutual Fund where he/she holds an
investment, along with other details such as the Bank Details, Signature, etc.
as per the present requirements of such Mutual Fund.
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Whom
do I inform about change of Name/Address/Status/Signature etc?
You should intimate your change of Name/Address/Status/Signature
etc. to any convenient PoS. You need to quote/submit a copy of your KYC
Acknowledgement and proof (in case of new address). You should provide for at
least 7 days for the change of address to take effect with all the Mutual Funds
with whom you are invested. Please note that you should not write to the Mutual
Fund or its Registrar for the change of address (unless as a designated PoS).
The specified form can be obtained from the AMFI/Mutual Fund website. All
details of the holders in the Mutual Fund records will be replaced by the
address details available in the CVL record.
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I
am already providing my PAN/PAN Proof for my investment in Mutual Funds. Is
that not sufficient for meeting the requirement of KYC?
The requirement of providing your PAN along with proof is sufficient for proof
of identity. However, the current requirement for KYC requires the Mutual Fund
to verify identity, address as well as obtain further information about the
investor.
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Why
do I need to give my income details? How can I be sure that it will not be
misused?
As per PMLA, it is mandatory for Mutual Funds to obtain financial status
details from its investors. It is for this reason that the income details are
sought. Please note that no proof/income documents are required. The
information given you in the KYC Application form will be treated in a
confidential manner and used only for regulatory purposes, if called for.
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Do
I need to inform about my change of Income status?
Yes. If there is an increase/decrease in your income, which
would effectively change the income bracket that you have declared in the KYC
Application form, you should apply to any convenient PoS in the specified form.
No proof is required.
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Can
an investor give a COA (Change of Address) along with redemption request?
The redemption transaction accompanied by a KYC Acknowledgement form is likely
to be processed without effecting the change of address request. The Registrar
and Transfer Agent of your Mutual Fund will send you a letter advising you to
approach CVL for COA.
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Is
the KYC Acknowledgement a separate form or is it a part of the Mutual Fund
application? Which of the forms require being time-stamped?
KYC Acknowledgement is a separate form and not a part of the
Mutual Fund application form. Time stamping is not required on the KYC
Acknowledgement.
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What
do I do once I have received my KYC Acknowledgement?
Once the investor is KYC compliant, he/she will require to
intimate his/her KYC details to all the Mutual Funds with whom it has
investments. The same will be updated in the records of the Mutual Funds.
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For
signature difference in investor request, Mutual Funds generally ask for a
banker attestation. Since a signature is not available with identity proof,
will you still insist on banker attestation for signature difference?
Signature verification is done by Mutual Funds to protect an
investor from losses. As such, Mutual Funds may follow extra due-diligence if
signatures are not matching, such as getting Bank attestation for such
transactions. This could be independent of the KYC procedure.
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