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Know How to Do KYC for mutual funds?

Mutual funds have become a hot commodity in the investment market. Many investors are turning towards mutual funds to achieve their financial goals. Investors opt for mutual funds as they offer high returns at low risk. However, the risk depends on the financial portfolio of the investor.

Getting started with Mutual Funds KYC

There are some things that you need to take care of before you start investing, such as comparing different mutual funds, knowing their returns, understanding the risk you might have to take, etc. But before doing that, you will have to register for KYC.

What is Know Your Customer (KYC)?

Know Your Customer or KYC is a customer identification process that allows financial institutions and banks to view your identity if you’re opening a mutual fund account. Whenever you open an account with a financial entity, you will have to showcase KYC as your identification. KYC provides your identity with documents such as PAN card, address proof, etc. to the financial organisation. If you want to open a mutual funds account, then you will have to be KYC compliant as per the mandate by the Securities and Exchange Board of India. You can become KYC compliant online as well as offline.

A mutual funds company needs investor’s details to open an account, and they require KYC compliance for registration. The government wants every investor to be KYC compliant to reduce the risk of money laundering. KYC offers investors’ genuine identity to the financial companies to offer them security from fraudsters.

KYC for Mutual Fund-

To invest in mutual funds, you need to KYC compliant. Now you will have a question how to register for KYC? The registration doesn’t take a lot of time. Also, you don’t need to put in many efforts to get your KYC done. Mutual fund KYC requires identity proof as well as address proof.

For identity proof, you require a PAN card. If you don’t have a PAN card, then passport, driving license, bank passbook will also be accepted.

Below are the documents you will require for address proof-

  • Passport copy

  • Electricity Bill (not older than 3 months)

  • Telephone Bill (not older than 3 months)

  • Bank Passbook or Bank Account Statement (not older than 3 months)

  • DEMAT Account (not older than 3 months)

  • Driving License

  • Rent Agreement

If you are applying as corporate bodies, then you also need to submit these documents-

  • Incorporation certificate

  • Authorised signatories list

  • Memorandum and Articles of Association

  • Board resolution

Individual applicants need to submit these documents-

  • Details of yearly income

  • Details of occupation

  • Your tax residency addresses in foreign jurisdictions

  • Status of the politically exposed person

Partnership firms must submit a certificate of registration, authorised signatories list, and partnership deed. Trust organisations can become KYC compliant when they submit a registration certificate, trust deed, and authorised signatories list.

How to register for KYC online?

You can register for KYC by following below steps-

  • Step 1: Visit the mutual fund company’s website

  • Step 2: Submit the details of AADHAR card

  • Step 3: Register your mobile number

  • Step 4: Enter the OTP you receive on your phone

How to register for KYC offline?

You can register for KYC online by following the steps below -

  • Step 1: Visit the office of the financial organisation

  • Step 2: Complete the application form

  • Step 3: Submit the necessary documents

You can also register for KYC with your AADHAR card. However, you need to remember that you can only invest Rs. 50,000 in a year if your KYC compliance is on the basis of your AADHAR card, as per the SEBI norms. If you want to increase the limit of investment, then you might have to provide an In-person verification. With a normal KYC registration, you will not have a limit on your investment as compared to getting AADHAR-based KYC. In-person verification might also be needed if you are applying for KYC online.

If you are applying for KYC as joint applicants, then all the applicants need to register for KYC. However, for Power of Attorney, KYC needs to be registered by the power of attorney holder and the investor. Also, NRIs must become KYC compliant.

KYC Registration

You can get registered for KYC with-

  • Asset management company

  • Registered Transfer Agent such as CAMS, KARVY, etc.

After you complete the KYC registration, you can start investing in mutual funds. However, you might need to submit extra documents if the KYC compliance requires it. If things are not in order, then you might have to wait a long time to become KYC compliant. You must complete the formalities with the right documents.