KYC Requirements for Mutual Fund Investors

All investors, both individual and non-individual, including joint holders, NRIs, PoA holders and its issuers, and guardians in the case of minors have to be KYC compliant, irrespective of the investment value. This applies for transactions such as new/additional purchases, switch transactions, new systematic investment plan (SIP)/micro-SIP registrations received from the effective date, new systematic transfer plan (STP) registrations from the effective date, new Transfer of Income distribution cum capital withdrawal plan dividend transfer plan (DTP) registrations from effective date.

The KYC process involves establishing the identity and address of the investor as required under the Anti-Money Laundering Laws. The application for investment must be accompanied by the acknowledgement for having completed the KYC process issued by the KYC Registration Agency (KRA). Broadly, mutual fund investors need to submit the following documents to the distributor or other capital market intermediary registered with SEBI, such as stock broker and depository participant. The information is updated in the central system of the KRA.

KYC Documents

For the KYC process (for establishing proof of identity and address), the following documents are required: Permanent Account Number (PAN) Card with photograph is mandatory for all applicants except those who are specifically exempt from obtaining PAN. This serves as the proof of identity. With a view to bring about operational flexibility and in order to ease the PAN verification process, SEBI has provided that market intermediaries may verify the PAN of their clients online at the Income Tax website without insisting on the original PAN card, provided that the client has presented a document for Proofof Identity other than the PAN card.

The following categories of investors are exempt from producing PAN:

• In case of transactions undertaken on behalf of the Central/State government and by officials appointed by the court.

• Investors residing in the state of Sikkim.

• UN entities/Multilateral agencies exempt from paying taxes/filing tax returns in India.

• Investments (including SIPs and lump sum investments) in Mutual Fund Schemes up to Rs. 50,000/- per investor per year per mutual fund.

These categories of investors however have to provide an alternate document such as the Aadhaar card, Passport, Voter’s Id, Driving License or other photo-identity card which serve as the proof of identity. Proof of Address such as Passport, Voter’s Id, Ration card, Driving License, bank account statement, utility bill and other specified documents. If the address for communication and permanent address are different then documentary proofs have to be provided for both. The proof of address in the name of the spouse may be accepted. The copies of the documents produced have to be self-attested and the originals have to be provided for verification purpose. In case, the originals are not produced for verification then the copies of the documents must be attested by persons authorized to do so.