What is KYC and why is it important for mutual fund investments?

KYC (Know Your Customer) is a mandatory process to verify the identity and address of investors. It is crucial for preventing money laundering and ensuring the integrity of financial transactions.

What are the new SEBI rules regarding PAN and Aadhaar linking for KYC?

As of October 2023, SEBI mandates that all mutual fund investors link their PAN with Aadhaar by March 31, 2024.

Can NRIs and foreign nationals complete the KYC process for mutual funds?

Yes, NRIs and foreign nationals can complete the KYC process. They need to submit a copy of their passport, PIO Card, or OCI Card along with proof of overseas address.

What is KYC and why is it important for mutual fund investments?

KYC (Know Your Customer) is a mandatory process to verify the identity and address of investors. It is crucial for preventing money laundering and ensuring the integrity of financial transactions.

What happens if my KYC is not completed or updated?

If your KYC is not completed or updated, you will not be able to invest in mutual funds.

What is the Mahila Samman Savings Certificate?

The Mahila Samman Savings Certificate is a government-backed small savings scheme aimed at providing financial security and encouraging savings among women and girls.

What are the new SEBI rules regarding PAN and Aadhaar linking for KYC?

As of October 2023, SEBI mandates that all mutual fund investors link their PAN with Aadhaar by March 31, 2024.

Can NRIs and foreign nationals complete the KYC process for mutual funds?

Yes, NRIs and foreign nationals can complete the KYC process. They need to submit a copy of their passport, PIO Card, or OCI Card along with proof of overseas address.

What happens if my KYC is not completed or updated?

If your KYC is not completed or updated, you will not be able to invest in mutual funds.

What is the Mahila Samman Savings Certificate?

The Mahila Samman Savings Certificate is a government-backed small savings scheme aimed at providing financial security and encouraging savings among women and girls.

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Mutual Fund KYC - SEBI Rules on How Investors Should Complete KYC Process

Komal Bajpai

Author

Updated: 28-01-2025 at 6:34 AM

Mutual Fund KYC - SEBI Rules on How Investors Should Complete KYC Process

The latest SEBI circular revealed that investors have to mandatorily link their PAN-Aadhaar to get their ‘KYC Validated’. All financial transactions including existing govt schemes will be restricted if they fail to re-do their KYC validation. Let’s understand what KYC is and how to re-do the KYC process.

What Is A Mutual Fund KYC?

KYC or ‘Know Your Customer’ is a process mandated by SEBI that helps in proof of identity and address for investors. KYC is done to safeguard against money laundering. This aims to enhance the security and transparency of the investment process

Investors with ‘KYC Validated’ status do not have to re-do the process and can continue to invest without any issues. Mutual Fund investors with ‘KYC Verified’ won’t be affected much, but they will not be allowed to invest in new mutual funds until they submit the KYC documents. Investors with ‘KYC on hold’ will have to wait till their KYC process is done again to do financial transactions or invest.

A press release issued on April 25, by the 5 KYC registration agencies (KRAs) says, "All KRAs put together hold KYC records of 10.83 crore. Out of which, 73% of KYC records are under 'KYC validated' status, 15% of KYC records under 'KYC Registered' status and balance 12% are under 'KYC On-Hold' status."

Required Documents To Submit

Individuals or non-individual investors have to submit the following documents to update their KYC status.

KYC For Individual Investors

Proof Of Identity

Aadhaar card
Voter’s ID
Driver’s Licence
Passport
PAN card
Government-issued ID card

Proof Of Address

Aadhaar card
Voter’s ID
Driving licence
Passport
Registered Lease Agreement
Utility Bill less than 3 months old

KYC For Non-Individual Investors

For non-individual investors to update KYC, it depends on the type of entity it is, like Company, Trust, Partnership firm, Body Of Individuals, etc.

What Are The Changes In KYC Rules?

The new KYC rules will focus on making the investing process more streamlined and secure.

Enhanced Verification

Investors are required to provide more detailed information and documentation to enhance security and safety.

More Updates

KYC details have to be updated periodically to ensure that the details provided are up-to-date and are not out-of-date.

Online Verification

To simplify the verification process, online verification has been introduced to update identity and address proof.

How To Update KYC Online?

Every investor will have a different set of steps to follow depending on where they invest their mutual funds. Let’s take a look at the basic steps one can follow to update their KYC details.

Visit the mutual fund's website.
Log into the account.
Go to modify or update KYC.
Enter the required details.
Provide the necessary documents.
Wait for the details to be validated by the KRA official database.

How To Update KYC Offline?

Investors can follow these steps if they wish to update their KYC offline.

Download the KYC form from the mutual fund website.
Fill out the form with accurate details.
Attach all the required documents.
Submit the form to the mutual fund company or RTA’s office.
Wait for the In-Person Verification (IPV) to cross-check the documents and identity.

Conclusion

Understanding the KYC process is crucial for mutual fund investors. All investors should make sure their KYC is updated often, otherwise, investors might not be allowed to make transactions or even invest in new mutual funds. Stay updated on all such updates to ensure complete streamlining of the investing process and no hindrance comes up.

To read more on such circulars by SEBI, visit the official website here.

Frequently Asked Questions