KYC for Mutual Funds in India: What It Means and Why It Matters

What is KYC in mutual funds

Know your client (KYC) means identifying and verifying the investor’s identity and beneficial ownership using proof of identity and proof of address documents. It is governed by rules under the Prevention of Money Laundering Act, 2002 (PMLA) and regulatory framework issued by Securities and Exchange Board of India.

Why KYC is important

1. Protects Investors

KYC reduces the risk of Identity theft, it ensures that transactions happen only with verified individuals.

2. Legal compliance

Under PMLA and SEBI regulations, intermediaries must perform client due diligence before allowing investments.

3. Fraud and money laundering prevention

Helps ensure transactions are legitimate and traceable.

4. Investor protection and transparency

Helps maintain clean financial records across the securities market.

5. Centralised records and portability

Once KYC is validated through KYC Registration Agencies (KRAs), you can invest across intermediaries without repeating KYC.

How to complete KYC for mutual funds

KYC is one time exercise, once KYC is done through a SEBI registered at a KRA Agency, investor need not undergo the same process again when he wishes to invest in another mutual fund/intermediary. You can complete KYC through two main ways:

1. Online e-KYC

• Submit PAN and Aadhaar details
• Video verification
• Complete OTP/Aadhaar verification

2. Offline KYC

• Submit following documents to any authorised intermediary:-  • Duly filled and signed CKYC form
 • 1 Passport size Colour Photo
 • Self-attested photocopy of PAN
 • Address proof (preferably Aadhaar card for CKYC Validation)
• Complete In-Person Verification (IPV) and carry original ID and address proof for verification.
IPV can be done by:
 1. Authorised officials of Asset Management Companies (AMC)
 2. Authorised officials of Registrar & Transfer Agent (R&T) acting on behalf of the AMC.
 3. KYD compliant mutual fund distributors.
 4. Manager of a Scheduled Commercial/Co-operative Bank or Multinational Foreign Bank (for investors investing directly).

Steps to complete KYC for mutual funds in India

Step 1: Visit the KRA or mutual fund website

Go to the website of a KYC Registration Agency such as NSE, NDML, CAMS, CVL, or the mutual fund house where you want to invest.

Step 2: Enter PAN, name and Aadhaar

Provide your PAN & other details to start the verification process.

Step 3: Video KYC , documents & Signature Capturing

Investor to upload the scanned image of the documents and share pic of documents over videocall.

Step 4: Complete OTP verification

Enter or say aloud the OTP linked to Adhaar to authenticate your identity.

Step 5: KYC approval

After verification with UIDAI, the KRA processes and approves your KYC.

Step 6: Check KYC status

You can check your KYC status on the KRA or mutual fund website using your PAN.

What KYC status means

After submission, your KYC shows one of the following statuses :

1. KYC Validated: Records are portable. The client need not repeat KYC when approaching another intermediary, as validated details can be fetched from the KRA database.

2. KYC Registered: The investor must complete KYC each time they approach a new SEBI-registered intermediary.

3. KYC On-Hold / Rejected: This occurs due to document deficiencies (e.g., PAN validation failure, unverified mobile/email). Transactions are allowed only after verification and resolution.

4. KYC not available: No KYC record exists, as the KYC process has not yet been completed.

   

Important note:
KYC status of Resident Individuals should be ‘Validated’ for seamless transaction in new and existing mutual fund houses, for KYC validation Aadhaar should be submitted as ID/Add proof. Investors whose KYC status is ‘Registered’ can continue to transact with the existing fund house(s). If they wish to invest in a new Mutual Fund or with any new SEBI Registered Intermediary, the investors are mandated to submit the set of KYC documents with allowed OVD again in the new MF/intermediary, as per new requirement. Remember, KYC rules may change based on regulatory updates. Always check the latest circulars from SEBI or guidance from AMFI before investing.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund
All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link: https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully