Incomplete KYC is one of the major reasons why mutual fund purchase gets rejected. Every time I go out on a sales call of a mutual fund, I face a lot of queries. Like,
How to do KYC for mutual fund
What is KYC and why it is required?
There is much confusion among investors. Like where to update KYC details if they have changed address or changed mobile numbers. I have even seen irritation on the face of new investors due to KYC rejection or due to document requirements.
But KYC is the mandatory requirement, without it, you can not invest in mutual funds or equity markets. So, I thought to write on it to help you all in starting your new journey of wealth creation. I have worked with the mutual fund industry for 3 years and I have helped around a thousand people fill up their KYC forms.
In my career, I have seen various cases where mutual fund transactions were put on hold due to the incomplete KYC status of the investors. After reading this article I am sure that you will get full clarity on how to do KYC for mutual funds and why exactly it is required. You will also be able to complete your KYC within a few minutes after reading this guide.
So, What is KYC in mutual funds?
Before knowing how to do KYC for the mutual funds, first, let us make it clear what is KYC?
If you do not know about it then first you should know the full form of KYC is Know your customer.
The full form itself gives half of the answer. In simple language, it is an identification process of a customer by any financial institution. Here is our case: it is a mutual fund house. Now, you may ask why it is required? Well, It is a regulatory requirement by the government, to prevent money laundering.
Our government expects all financial institutions to maintain a complete record of their clients. As a regulator of mutual funds in India, SEBI has made KYC compulsory for all mutual funds investments.
All the documents and information you provide at a time of investment are maintained by KRA ( KYC registration agency) and it is a one-time process.
Apart part this common question how to do KYC for the mutual funds, Also, I have been asked by some clients, Can I invest in a mutual fund without KYC? The answer is no, you can not. Without KYC or with incomplete KYC, your mutual fund’s purchase will be on hold.
If you do not so needful in a given time, your purchase will be rejected by RTA ( Registrar and transfer agent)
Another similar question I am frequently asked is, Is KYC mandatory for SIP ? The answer is, yes it is. SIP is just a systematic investment route to a mutual fund. Ultimately you are buying mutual funds units on a fixed date! So, Be it a lump sum amount or a SIP, KYC is mandatory.
Hope everything is clear now about KYC. Now, as you are fully aware that why KYC is required, we will move to the next important step,
How to fill Mutual fund KYC form
If you are a first-time mutual fund investor, you need to fill up one form and attach documents with it.
If you are already a mutual fund investor, You do not need to fill-up the form again.
You just need to keep your PAN card handy and get your KYC acknowledgment from the KRA website. I will tell you later how to do that.
The important thing here to remember is that You do not need to do KYC for different mutual fund houses. If you have invested before with any mutual fund, you are good to go.
In the mutual fund KYC form, you just need to provide your personal information like your full name, mother’s name, marital status, your current and permanent residence address( provide both if they are different), mobile number, email, and your signature.
If you have already invested before in any mutual fund, you can check mutual fund KYC status online. You can visit CVLKRA or KarvyKRA websites and check your KYC status. If your KYC status is registered, you do not need to fill-up the form again. You just need to take a printout of that acknowledgment and attach it along with a mutual fund purchase form.
Now, as you are ready with your KYC form, we will move to the next important step,
What are the documents required for mutual fund KYC
You are required to attach 2 types of documents along with your mutual fund KYC form.
- Photo identity proof document
- Residence proof document
One more important thing is, that your PAN card is mandatory for the KYC process, except in some rare circumstances like having a PEKRN number or small investments.
But, it is advisable to attach your PAN card to avoid any future hurdles.
If you attach your PAN card photocopy, it also works as a photo identity proof. You can find eligible photo identity and residence proofs like voter id, aadhar card, and passport on the second page of the KYC form.
Along with that, you are required to attach your recent passport-size photo to the form.
It was all about the process of offline KYC for the mutual funds. Now we will see how you can do it more comfortably on your smartphone or laptop.
How to complete KYC for mutual fund online
If you are using a smartphone and have the internet, online KYC is a more convenient option for you. You can avoid physical visits to the KRA office or mutual funds office by just doing it all online.
Online KYC is a very simple process, you just need to input all the data similar to the physical KYC form in your smartphone and upload self-verified documents.
But you need to remember a very important thing in mind, 2 types of KYC verifications impact all your future transactions.
It is the most approved form of KYC. With c-KYC, you can do any number of transactions in mutual funds without any limitations. The reason for it is simple, it indicates your in-person verification by an authorized person. It can be done in physical meetings or by booking video conferencing.
If you are doing your KYC offline, by default you will get c-KYC status because you visited the office and got verified by the designated officer present there.
If you are doing it online, you can book video KYC verification with a respected mutual fund. Keep your documents and signature handy to complete it over the video.
But in the online KYC process, there is also another way apart from video verification
Now you might be thinking, what is e-KYC for a mutual fund? How can it be different from the previous one?
Well, the answer is, that it is very much different. In e-KYC, you are allowed to complete KYC with the help of getting OTP verification with the help of your aadhar number. You are not required to do video verification, still, you are verified on the bases of your aadhar data.
But, as it is not in-person verification like the previous method, here comes a restriction. You can not invest in a mutual fund of more than 50,000 rupees in a year. This cap applies across the industry, it means your total amount of investment across multiple mutual funds and not a single fund.
Any of your transactions exceeding 50,000 in a year will be rejected. So, It is advisable to complete a one-time c-KYC to avoid any future regulatory hurdles. Now last but very important step,
Where to submit KYC form for mutual fund
If you are doing it online, it is very simple to push the submit button after filling in all required data and uploading relevant documents. Once you have completed video verification, you are done with the process and you will get confirmation over your mobile.
But if you are doing it offline, you can visit your nearby mutual fund office where you are going to invest your money. They will complete your verification and you can submit your documents there. Alternatively, you can also visit the KRA office, if there is any in your city to submit the KYC form.
You can also visit the same location if you wish to update your KYC details like your name, address, or mobile number.
Summary of the whole KYC process
KYC is mandatory for mutual fund investment and it is a one-time process. You should complete your c-KYC to avoid any limitations or regulatory hurdles in the future. So, That’s it about how to do KYC for the mutual funds. Before knowing how to invest in a mutual fund you should first have knowledge about KYC as well as personal financial planning.
I have given all possible information you may require to complete your KYC process to buy mutual funds. Still, if you have any more queries you can connect with me or write them in the comments.