New KYC rules for mutual funds in 2024-25: Here's what you should know

Mutual fund (MF) investors who invested by submitting bank statements or utility bills before the introduction of the now ubiquitous Aadhaar but did not update the 12-digit digital ID number in their individual folios.

If you have not provided information about Aadhaar, you will not be able to purchase new MF units. It will be mandatory for investors to do KYC (Know Your Customer) through Aadhaar to buy MFs between 2024 and 2025.

With the new KYC (Know Your Customer) rules by market regulator SEBI coming into effect for MFs from April 1, investors should check with KRAs (KYC registration agencies) such as CAMS (Computer Age Management Services) compliance status. )

"Many investors have not done Aadhaar-related verification. Without Aadhaar-related KYC, investments in new MF schemes cannot be made," said Suresh Sadagopan, the founder and managing director, Ladder7 Wealth Managers, a Mumbai-based wealth management company.

He stated that we update our customers regarding legal modifications and ask for the required documents from investors in hard copy. Here is a detailed plan to verify your KYC status with KRA in order to maintain consistent access to your MF investments.

How to check your MF KYC status online?

Here is a step by step guide to check KYC status of mutual funds online.

1- Login to www.CVLKRA.com.

2- Then, click on 'KYC inquiry'.

3- After clicking on this, a new page will open.

4- Next, input your information such as PAN, solve the CAPTCHA, and proceed with submission.

5-Your KYC status will now be displayed.

If the investor's KYC is not verified, he/she can visit KRA website and check the status with PAN card and Aadhar card.

What happens if an investor fails to obtain KYC verification?

If a mutual fund investor fails to obtain KYC verification, the mutual fund folio will be frozen. This means that the investor cannot sell the units. Additionally, you cannot recharge with the same folio number.

If your Aadhaar and PAN are not linked or misspelled in your current KYC, you will need to go to KRA office (KYC registrar) for KYC verification. It will be through physical form.

KYC is registered or verified

If a mutual fund investor fails to obtain KYC verification, the mutual fund folio will be frozen. This means that the investor cannot sell the units. Additionally, you cannot recharge with the same folio number.

If your Aadhaar and PAN are not linked or misspelled in your current KYC, you will need to go to KRA office (KYC registrar) for KYC verification. It will be through physical form.

KYC is validated

This indicates that you have completed your KYC process with your Aadhaar card. You are able to keep investing in current and new MF schemes without any issues.

What are the new rules for NRI investors?

New KYC norms have made investing in MFs a difficult task for NRIs (Non-Resident Indians). They worked anonymously on road sections for NRIs. NRIs and OCIs (Overseas Citizens) with other mobile numbers are exempted from the Aadhaar-linked OTP (one time password) authentication process if their PAN indicates their immigrant status.

But the new KYC norms requiring Aadhaar verification have resulted in major problems for the Indian diaspora. Aadhaar verification often requires OTP verification as it requires a valid Indian connection. NRIs cannot change their KYC status as they only have international mobile numbers.

What documents are eligible for KYC?

• Passport
• Proof of possession of Aadhaar number
• Voter Identity Card
• Driver’s licence
• Job card provided by NREGA and endorsed by a state government official.
• Official document from the National Population Register providing information on name and address.
• Any other document notified by the central government.

FAQs

Q. What are the new rules for KYC in mutual fund?

A. Investors can obtain "KYC-registered" status by completing KYC with other Officially Valid Documents (OVDs) such as Aadhaar, passport, driving licence, or voter ID card

Q. Is Aadhaar mandatory for mutual fund investments?

A. As per a circular dated May 14, SEBI announced that investors can now invest in mutual funds even if their Aadhaar card and PAN card are not linked. Previously, a rule implemented on April 1 required the Aadhaar-PAN link for KYC validation.

Q. Is PAN card mandatory for mutual fund?

A. All entities such as companies, partnership firms, etc. and individuals are required to quote their PAN in the process of several financial dealings and transactions such as purchase or sale of property, payment of tax and purchase and sale of stocks or mutual fund units.

Q. What proof is required for mutual fund investment?

A. The applicant needs to be KYC Compliant. The Savings Bank Account status has to be Single or Either/Survivor. The Account Opening Application Form has to be signed by the all the Bank Account Holders.

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