Till now, KYC verification for investing in mutual funds has been paper-based. Moreover, frequent amendments in KYC norms — which even the existing KYC-compliant investors have to 'repeatedly' satisfy — have frustrated many investors interested in the mutual funds.
All inconveniences, caused by these numerous and often-changing formalities, is now likely to end.
In its recent circular on Know Your Client Requirements, SEBI (Securities and Exchange Board of India) has issued a clarification on the voluntary adaptation of Aadhaar based e-KYC process.
In Oct 2013, SEBI had intially allowed mutual funds to offer KYC verification, using the UIDAI's (Unique Identification Authority of India) Aadhaar based e-KYC service.
Aadhar Letter issued by UIDAI, was already an acceptable and valid Proof of Address plus Proof of Identity w.e.f. Aug 2012 itself. The Oct 2013 circular permitted e-KYC service, launched by UIDAI, as a valid process for KYC verification. Details received from UIDAI, as a result of this e-KYC process, was to be considered as sufficient proof for both identity and the address. This was to be on a voluntary basis only, subject to authorization by the client, for intermediary to access his UIDAI data.
The present circular provides certain clarifications on the operational aspects of the same.
1. The intermediaries, who would like to utilize the services offered by KYC Services Agencies (KSAs), would have to first register themselves with UIDAI as a KYC User Agency (KUA).
2. Clients would provide to the intermediary their Name, Aadhaar Number and Permanent Account Number (PAN) for the purpose. This can be done even electronically (including any web-enabled service).
3. The intermediary shall carry out the client KYC verification with UIDAI, through biometric authentication i.e. fingerprint or iris scanning.
The verification can also be done through One Time Password (OTP) on the client's mobile number or email ID registered with the UIDAI, provided
a) amount invested does not exceed Rs.50,000 per financial year per Mutual Fund and
b) payment is made via electronic transfer from the client's bank account registered with the Mutual Fund.
4. PAN can be verified on the Income Tax website.
Fun to Read: Sachin, Shikhar Aur Mutual Fund Returns
5. Client information received by the intermediary (KUA), from UIDAI through the KSA, would be considered sufficient for the purposes of KYC verification.
6. However, if (a) there is material difference in the name in PAN and Aadhaar or (b) the photograph in Aadhaar is not clear, the intermediary can seek additional documents from the client to complete this due diligence process.
7. This KYC information shall be uploaded by the intermediary on the KYC Registration Agencies (KRAs) system .
8. In line with the Supreme Court's judgement, usage of Aadhaar Card would continue to be optional and on voluntary basis only.
9. Meanwhile, other relevant KYC circulars issued, along with the provisions of Prevention of Money-Laundering Act, 2002 and SEBI Master Circular on Anti Money Laundering, shall continue to remain applicable.
More Fun to Read: Why Mutual Fund NAVs Won't Double In A Day?
Those wishing to invest more than Rs.50,000 in a year with a particular Mutual Fund, have to still comply with the "In Person Verification" or IPV. This requires you to personally furnish self-attested copies of the relevant KYC documentation. Thereafter, there is no limit on the amount you can invest in various mutual fund schemes.
Of course, this limit of Rs.50,000 is pointless, given that the investor would have completed verification formalities three times earlier... at the time of getting the Aadhaar Card, PAN and a Bank Account... all of which are mandatory to transact in mutual funds.
Any way, something is better than nothing. And, hopefully, this restriction on amount would soon be removed.
Now that this totally online process has been permitted by SEBI, investors should jump in quickly and start investing in the mutual funds, from the comfort of their home or office. No more of the tedious paperwork.
Mutual funds are the best investment mysteriously ignored by most Indians. However, I guess it is high time they discovered this, or else they would continue to miss out on the mind-boggling returns.
And, here are the top 5 mutual funds you must invest in.
Beware! In the course of becoming a 'mutual fund' crorepati, you would do well to avoid the shocking mistakes mutual fund investors often commit.
All inconveniences, caused by these numerous and often-changing formalities, is now likely to end.
In its recent circular on Know Your Client Requirements, SEBI (Securities and Exchange Board of India) has issued a clarification on the voluntary adaptation of Aadhaar based e-KYC process.
In Oct 2013, SEBI had intially allowed mutual funds to offer KYC verification, using the UIDAI's (Unique Identification Authority of India) Aadhaar based e-KYC service.
Aadhar Letter issued by UIDAI, was already an acceptable and valid Proof of Address plus Proof of Identity w.e.f. Aug 2012 itself. The Oct 2013 circular permitted e-KYC service, launched by UIDAI, as a valid process for KYC verification. Details received from UIDAI, as a result of this e-KYC process, was to be considered as sufficient proof for both identity and the address. This was to be on a voluntary basis only, subject to authorization by the client, for intermediary to access his UIDAI data.
The present circular provides certain clarifications on the operational aspects of the same.
1. The intermediaries, who would like to utilize the services offered by KYC Services Agencies (KSAs), would have to first register themselves with UIDAI as a KYC User Agency (KUA).
2. Clients would provide to the intermediary their Name, Aadhaar Number and Permanent Account Number (PAN) for the purpose. This can be done even electronically (including any web-enabled service).
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| Online investing in mutual funds becomes truly paperless with Aadhaar e-KYC. |
3. The intermediary shall carry out the client KYC verification with UIDAI, through biometric authentication i.e. fingerprint or iris scanning.
The verification can also be done through One Time Password (OTP) on the client's mobile number or email ID registered with the UIDAI, provided
a) amount invested does not exceed Rs.50,000 per financial year per Mutual Fund and
b) payment is made via electronic transfer from the client's bank account registered with the Mutual Fund.
4. PAN can be verified on the Income Tax website.
Fun to Read: Sachin, Shikhar Aur Mutual Fund Returns
5. Client information received by the intermediary (KUA), from UIDAI through the KSA, would be considered sufficient for the purposes of KYC verification.
6. However, if (a) there is material difference in the name in PAN and Aadhaar or (b) the photograph in Aadhaar is not clear, the intermediary can seek additional documents from the client to complete this due diligence process.
7. This KYC information shall be uploaded by the intermediary on the KYC Registration Agencies (KRAs) system .
8. In line with the Supreme Court's judgement, usage of Aadhaar Card would continue to be optional and on voluntary basis only.
9. Meanwhile, other relevant KYC circulars issued, along with the provisions of Prevention of Money-Laundering Act, 2002 and SEBI Master Circular on Anti Money Laundering, shall continue to remain applicable.
More Fun to Read: Why Mutual Fund NAVs Won't Double In A Day?
Those wishing to invest more than Rs.50,000 in a year with a particular Mutual Fund, have to still comply with the "In Person Verification" or IPV. This requires you to personally furnish self-attested copies of the relevant KYC documentation. Thereafter, there is no limit on the amount you can invest in various mutual fund schemes.
Of course, this limit of Rs.50,000 is pointless, given that the investor would have completed verification formalities three times earlier... at the time of getting the Aadhaar Card, PAN and a Bank Account... all of which are mandatory to transact in mutual funds.
Any way, something is better than nothing. And, hopefully, this restriction on amount would soon be removed.
Now that this totally online process has been permitted by SEBI, investors should jump in quickly and start investing in the mutual funds, from the comfort of their home or office. No more of the tedious paperwork.
Mutual funds are the best investment mysteriously ignored by most Indians. However, I guess it is high time they discovered this, or else they would continue to miss out on the mind-boggling returns.
And, here are the top 5 mutual funds you must invest in.
Beware! In the course of becoming a 'mutual fund' crorepati, you would do well to avoid the shocking mistakes mutual fund investors often commit.
