How To Do E-KYC For Mutual Fund Investments - Online KYC For Mutual Fund
Thanks to advances in technology and security, today it is possible to do e-KYC online and start investing in mutual funds. Just as you can get your bank account opened, trading account activated and also your mobile connection using your Aadhar card, you can also start your mutual fund investing using your Aadhar card authentication.
How is E-KYC for mutual fund investing different from traditional KYC?
The paper-based KYC process required submission of paper documents like a filled out KYC registration form signed by the prospective investor and self-attested copies of Identity proof documents such as PAN card, Driver’s License, etc. Then there was in-person verification at the local office of the registered KRA or the broker the investor was planning to invest with. With e-KYC, all that is set to change.
The whole process has been made simpler with e-KYC for mutual fund investing based on Aadhar card. As the starting point ensure that your email and mobile are registered with Aadhar and it is the same as what you are giving for mutual fund contact point. The online KYC registration process has eliminated the need for cumbersome paperwork or the in-person verification requirement. However, the e-KYC for mutual funds can only be completed through a SEBI-mandated KYC User Agency (KUA).
A KUA is UIDAI-approved to utilize a prospective investor’s Aadhaar number in order to complete the online KYC registration using OTP (one-time password). This is just a one-time process and later you can use the same KYC approval to go ahead and do the needful. This one time process is valid till the time the regulator asks you to again do your KYC.
What are the steps involved in online E-KYC
The online KYC for mutual fund can be completed in 4 simple steps. Once the process is completed, your KYC is done in less than 20 minutes. Here is a look at the 4 steps in detail:
- In the first step, provide your Aadhaar card number when prompted. Before you start the process, make sure that your mobile number is updated and registered with the Aadhaar UIDAI website. This is essential for receiving OTP. In case this is not the case, visit an Aadhaar Enrolment Centre and get your mobile number registered on the Aadhaar database. This combination of Aadhar Card mapping to your mobile number, bank account and PAN must be done before you start the KYC process.
- In the second step, once your 12-digit Aadhar number is entered you can generate and receive one-time password (OTP) from UIDAI on your registered mobile number valid for a limited time. In case you don’t receive on your mobile, you can also check on your registered email id. If there are delays in the system, either try again or ask the system to resend the OTP.
- In the third step please input the OTP properly and once that is done you will receive a confirmation document. Subsequently, the investors have to e-sign the verified document and send it to the KUA in question for completion of Aadhaar e-KYC process. The entire process takes few minutes only and does not feature submission of paper documents.
- Once above e-KYC process is completed, the investor is right away allowed to start investing in mutual funds. However, there are restrictions. Currently, e-KYC verified investors can invest only up to a maximum of Rs. 50,000 per mutual fund per year. Thus an investor making investments in 6 separate funds can invest up to Rs. 3 lakhs (50,000x6) during the year. For increasingly limit, complete the biometric verification or biometric e-KYC. Since this requires your finger print verification, the biometric verification requires your physical presence at the investor service centre of any KRA across India for which is authorized to verify biometric data. Once the biometric e-KYC is fully done, you can invest in mutual funds without upper limits.
The above process has substantially simplified the process especially for those who need to start off with SIPs.
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Frequently Asked Questions
Aadhaar e-KYC is a special service offered by the Unique Identification Authority of India (UIDAI) to businesses and organizations. With the e-KYC of Aadhar one can validate the identity of an individual by verifying the personal details of an individual such as name, address, etc. against his or her biometric information held with the Aadhaar database. Of course, you must ensure that all the information is up to date in the Aadhar database as the details will be drawn from the database. The Aadhaar e-KYC software is based on the Aadhaar KYC Application Program Interface (API) which allows quick and easy integration into an existing system or app.
Know Your Client (KYC) details are required to be submitted mandatorily to several departments of the Government, banks and financial entities. This is required under the Prevention of Money Laundering Act (PMLA). This would require a person to be present in-person and manually submit verification documents, which is a time-consuming process and requires storage and retrieval of a customer’s documents.
On the other hand, electronic KYC or e-KYC validates the identity of an individual using Aadhaar-based biometric scan and / or OTP in a matter of minutes. Quite often, the banker representative can visit your place with a biometric enabled scanner and complete your KYC electronically. This is quick, transparent and almost fool proof.
The Aadhaar-based OTP verification does not require you to be present for customer verification. It requires an individual to enter his or her Aadhaar number online. A one-time password is generated on the Aadhaar-enabled mobile number. Your Aadhaar details will be downloaded automatically onto a screen and after verification of identity, a customer will be permitted the use of services. Verification of Aadhaar and authentication can be done either through OTP or through approved and authorized biometric devices.
In-person verification is done where the physical presence of the individual is required while submitting verification documents. Do you still need to do IPV after doing Aadhar verification OTP verification will allow you to transact up to a point. Beyond that you need to do IPV by visiting a centre.