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What is mutual fund KYC?
Any bank, lending institution, investment platforms, mutual fund companies, insurance firms: basically any company that provides financial services needs to do a background check of its customers. This is mainly done to prevent money laundering instances, frauds and criminal activities. KYC is another name for such background checks. Online KYC for mutual funds can be completed by investors and they can choose the offline route as well.
KYC is an acronym for ‘Know your customer’ which is nothing but a customer identification process conducted by all financial institutions: brokers, asset management companies, banks and likewise. In lieu of the customer identification process you will be asked to furnish your photo identification, address proof and other identification documents to authenticate your identity.
The process of mutual fund KYC check is required under Prevention of Money Laundering Act (2002). Reserve Bank of India first furnished KYC guidelines in the year 2002. This has to be read together with the master circular issued by Securities and Exchange Board of India (Sebi) on Anti Money Laundering Standards which re-emphasizes the need for the same.
Why is mutual fund KYC compulsory?
KYC is compulsory to make sure that investments made are of no spurious nature, preventing future cases of money laundering and frauds. It is a process to make sure that everyone who is investing provides their real names and details to prevent any unforeseen circumstances in future.
So when an asset management company asks for identification documents for a mutual fund KYC check it is mainly doing the same to establish authenticity. This is done to make sure that you are making the investment for investment purposes and that you do not have a history of defaults.
How can you get your mutual fund KYC done?
There are primarily two ways of getting your mutual fund KYC done: offline and online.
Offline KYC for mutual fund:
CDSl Ventures Ltd. has been authorised by the mutual fund industry to conduct the KYC process for its investors. CVL is taking care of the ‘customer profiling and record keeping’ for completing the KYC norms.
- Firstly you can download the KYC application form from CDSL’s website..
- Fill in the details and attach copies of your attested photograph, ID proof, address proof and PAN card
- Submit all these along with the application form to the mutual fund house or the intermediary you have chosen to invest with by going to their office.
Online KYC for mutual fund:
e-KYC can be done very easily depending on the intermediary you choose to invest with. When it comes to online KYC, the process needs to be individually with the mutual fund house, the intermediary or whichever platform you choose to invest with.
The only difference that lies between offline and online KYC is that you will have to fill the form online and upload all the documents required. It relieves you from the cumbersome process of physically going to the office just go get an authentication done.
- Log on to the website of any KYC Registered Agency
- Create an account and fill in all the details on the online form
- You will have to provide your registered mobile number, PAN Card and other identification details
- Upload self attested documents online
After completing the KYC process via a KRA: online or offline, you will get a KYC identification number that can be shared with your chosen investment platform for you to begin investing.
Aadhaar based KYC: Even though providing Aadhaar for KYC is not compulsory anymore, investors do still prefer going the Aadhaar route for completing their KYC norms. In Aadhaar-based KYC as well, there are two ways to get the process done.
Offline: Someone from the agency, distributor or fund house will come to your house and do a biometric KYC by mapping your fingerprint on the scanner that links it directly to the UIDAI Aadhaar database. Your details will come on the screen and you are ready to go for investment.
Online: Similarly, when you are filling the online application form with the KRA, after giving your PAN card details, you can simply give your Aadhaar number and the online back-end system will map all your identification details from the UIDAI database and your KYC number will be generated.
What are the documents required?
Authenticity is established on different levels: you name, photograph, resident address, income proof and such things need to be confirmed. For the same, these are the documents that are required:
- PAN card: Your PAN number is compulsory for your mutual fund KYC.
- Identity and address proof: Any document such as your driver’s license, passport, Aadhaar card can be used in this regard. You can also use your electricity bills for address proof however in that case you will have to provide a separate document for your ID proof.
How to Check Mutual fund KYC status
In case you to check KYC status for mutual funds investments, there are few easy steps you need to follow:
- Go to cvlkra.com
- Enter your PAN number and other details asked for
- You will now be able to see if your KYC process was valid or not.
How Can You Do KYC with Groww?
At Groww, you can complete the entire KYC process digitally in just five minutes and start investing. Here are the steps to do so:
- Go to www.groww.in
- Sign up for an account with an email address
- Provide your mobile number and feed in an OTP number
- Provide your PAN number in the next step
- Provide details such as date of birth, gender and nationality
- Enter income details and names of family members
- Enter nominee details
- Provide bank account details
- Upload a picture of yourself and your PAN card
- Give a signature on the website
- Congratulations. Your account is ready and you can invest now.
- Don’t forget to set up a Groww pin.
To sum up, the KYC process is a necessary and essential step to have a hasslefree investing experience. Make sure you have all documents needed for KYC with you before you proceed.