A Complete Guide on KYC Form for Mutual Fund Investments

    KYC or Know Your Customer is to identify the customer. The Securities and Exchange Board of India (SEBI) has laid down these guidelines under the Prevention of Money Laundering Act 2002. According to which, it is binding for financial institutions and financial intermediaries like Mutual Funds to acquaint themselves with their customers. By getting the KYC form filled from their customers, helps prevent money laundering and other suspicious transactions.

    To ensure compliance with the SEBI and AMFI guidelines on the subject you first have to fill up the KYC form from CVL (CDSL Ventures Limited). Upon furnishing the required documents along with the KYC form, CVL issues KYC Acknowledgement. The KYC formalities have to be completed for all mutual fund-related transactions. Whether it is Purchase, Switch-in, Systematic Investment Plans (SIP), Systematic Transfer Plans (STP), etc. Irrespective of the transaction amount. If the KYC application is not accompanied by KYC Acknowledgement, the same will get rejected.

    What is KYC

    With the digital revolution, most financial activities and processes have moved from being paper-heavy to fully or mostly digital paperless. Also, this has led to authorities being extra careful in preventing illegal transactions. To prevent the misuse of online financial facilities, regulatory authorities such as the RBI and the SEBI came up with this compliance requirement of KYC.

    KYC is a mandatory requirement for various financial institutions. Including, but not limited to, banks, NBFCs, mutual fund houses and various securities market intermediaries operating in India. As of now, the KYC rules necessitate that a separate KYC Form in the format, as applicable, be filled out. Whether for individual investors or institutional investors. Based on the type of KYC application form being filled out, one or more fields available in the form will differ. But the basic information required is quite similar irrespective of investor type. Nowadays, an eKYC registration form is also available, The fields that need to be filled out in the online form are also almost the same as the original paper KYC document.

    As mentioned above. there are multiple Mutual Funds KYC forms available, depending upon whether the applicant is an individual or anon-individual (HUF, Institution, etc.). Or whether seeking a fresh KYC for a new investor or updating existing KYC information with fresh data. Below, we discuss the general format, using the CAMSonline KYC form as the general template.

    Download KYC Form Here

    When to fill the KYC Form

    A KYC form may have to be filled out by an individual investor or a non-individual investor (HUFs, institutional investors, etc.) in several cases. The following are some of the major instances.

    New Investor Registration

    This is the most common reason for an investor to fill out and submit a new KYC form and also provide relevant documents to validate the application. The information filled out is initially collected by the 3rd party financial institution/fund house/AMCs. Then it is passed on to one of the KRAs – KYC Registration Agencies (CVL KRA, CAMS KRA, etc.) operating in India. The organization that collects the information initially, is by law required to verify the key details of the registration as per the SEBI mandate. And only afterward, it can be passed on to a KRA. The KRA, thereafter, uploads the data from the KYC document to a central database. This inclusion of the information on the database ensures that if the investor decides to invest with a different 3rd party, fresh KYC document will not have to be submitted. The benefit of this is double fold. One is that the elimination of fresh KYC form submission requirement every time reduces the hassle faced by the investor. On the other hand, it also reduces the duplicate effort due to multiple KYC requests of the same investor which freeing up organizational resources for other activities. At present, most of the new investors are opting for the much more streamlined online KYC registration completed through the Aadhaar card and Aadhaar database. Even the paper-based KYC form can be used if you are seeking to get registered for mutual fund investments at a later date.
    It is, however, important to note that the complete online system does have a limitation of transaction limits as per current rules. While the paper system allows you can make any number of investments any limits whatsoever.

    KYC or Know Your Customer is a customer identification process.

    Change Details Registration

    Our details keep changing from time to time. Such changes need to be updated on the KYC website so that the information available is updated. In case of change, the data needs to be updated on the centralized database by replacing the old data with the new one. This is done by filling out a new KYC form, which is similar to a fresh KYC document. However, only the field that has changed needs to be filled out in this case. After the details are filled out, the rest of the process is the same. That is the initial check by the institution accepting the revised KYC form. Once validated, the updated information is sent over to the KRA to be uploaded to the centralized database. Moreover, a new record for the investor needs not to be created as only one or more fields need to be updated. If the updated data cannot be validated by supporting documents, the institution would communicate the requirement of additional KYC document(s) to the investor. Till the supporting documentation has been provided by the investor, the information currently available on the database will be considered as the correct one.

    Contents of the KYC Form

    Given below are the fields that need to be filled out on the KYC document at the time of new registration/update of existing information.

    Identity

    In this section, the basic ID information is to be provided. That is the name, father’s/Spouse’s name, PAN with a self-attested copy of PAN attached, DOB, Gender, Citizenship, Occupation, and Residential Status. These fields are mandatory and supporting documents must match the information filled out on the form.

    Proof of Identity

    Apart from PAN, an attested copy of additional proof of identity document is required to validate the details such as name and other details mentioned in the above section. The acceptable documents in this section include most Government Issued photo ID proofs such as Voter ID, Driving License, Passport, Aadhaar, etc. The ID card number needs to be mentioned in the relevant field of the KYC document.

    Address

    This needs to match with the Aadhaar card or other identity proof document (except PAN card as it does not have an address printed on it). If the correspondence address differs from the permanent address, the permanent address needs to be filled out here. The valid correspondence address needs to be provided in Annexure A1 mentioned below.

    Contact Info

    n the current scenario, a wide range of information gets exchanged via email and SMS instead of physical letters sent to the mailing address. Therefore the Form provides sections for email id and mobile number (without zero). In case you decide to change these at a later date, you will need to submit a revised form filled out with the correct details at a later date. In addition to these, you can also provide home and office landline phone numbers in the relevant sections.

    FATCA/CRS Information

    The FATCA or Foreign Account Tax Compliance Act is a mandatory requirement that all mutual fund houses and investors need to comply with. The reason for the introduction of this section is because many Indians are now investing overseas. And there has been an increase in the number of overseas investors making investments in India, as well. All this necessitates further compliances to ensure transparency of income from international as well as national sources. The FACTA law is designed to help the Indian Government. It accurately estimates the income of these investors and ensures that they pay taxes on such income. Therefore, this section includes “Country of Jurisdiction of Residence” along with “Country Tax Jurisdiction Code as per ISO 3166”, “Tax Identification Number/equivalent of the relevant jurisdiction”, “Overseas Address for Communications” and so on. This section need not be filled by resident Indian investors exclusively making investments in India.

    Nominees

    Individuals investors can nominate another person to carry out Mutual Funds investment transactions on their behalf. Such an individual is usually a family member such as parents/guardians, siblings, spouse, children, etc. If you are investing on behalf of your child, you will have to provide your details including KYC Number in this section. And your name and registered address. If in case, you are not yet KYC compliant, you will need to provide a certified copy of your valid ID proof.

    Finally, the form must be duly signed, with date, by the applicant with the place where it was signed before submission.

    Annexure A1
    This section needs to be filled out when the local or correspondence address is different from the permanent address of the investor. The correspondence address must be backed up with acceptable address proofs. The acceptable address proofs include utility bills (postpaid mobile, electricity, gas, etc), bank/Post Office account passbook copy, etc. Till a supporting document is provided, the permanent address will be used as the correspondence address.

    Annexure B1
    This annexure would be filled out by existing KYC investors when they want to add a new “Related Person” to act as their authorized representative. Similar details as earlier need to be filled out. The copy of the document also needs to be attached to the application form. Moreover, the applicant’s signature needs to be provided in case of both Annexure A1 and Annexure B1 along with date and place information to ensure the validity of the mutual fund KYC form.

    Limits of Offline KYC

    The main shortcoming of the offline mutual fund KYC is that it is time-consuming. Once you have submitted the completed KYC document, one or more people would go through each and every document and verify that with the supporting documents provided. If somehow, there were any mistakes in the paper CAMS KYC form, the investor was notified by the broker or KRA and a fresh application would be made. This fresh application would also undergo the same checks. Moreover, before the introduction of the centralized database, this procedure needed to be done every time an investor wished to make Mutual Funds investments with a new fund house or broker. All this amounted to a high level of duplicate effort. Recording the same details from investors time and again.

    eKYC

    kyc form

    kyc form: WealthBucket

    Now you have the option to go for Aadhaar-based online KYC registration. Though the paper KYC system still exists. The key requirement is the availability of a valid Aadhaar card, which is slowly but surely becoming mandatory for various transactions in India. The new method uses UIDAI’s Aadhaar database to validate KYC data, online, within seconds. You can avail the benefits of the new process from the convenience of your home or office. Physical verification is no longer mandatory for new investors. You can also check the status of your KYC application online by filling some unique details.

    Benefits of Online KYC

    Some of the benefits of the online procedure are:

    • Lesser processing times
    • Errors get highlighted on the eKYC form immediately. This allows rectification before submission.
    • You can apply from the convenience of home or office.
    • Available 24×7.
    • Eliminates duplicate efforts as data gets synced with the central database immediately
    • Completely paperless. Therefore eco-friendly way.

    Physical Verification of Online KYC Registration

    The online mutual fund KYC registration process does have a small limitation in the form of transaction limits. When you get registered online, through a broker or a CAMS, you are allowed to invest only up to Rs. 50,000 per fund per annum. If you wish to make investments beyond this current limit, you would have to carry out in person verification at one of the registered KRA centers that are located all over India. On visiting the KRA center, you should carry your original valid Aadhaar card. Provide biometric verification via thumb or retinal scan to get the in-person verification completed. Paper documents are not mandatory, however, they help in times when the biometrics gets locked on the UIDAI website. Once the verification process gets completed and all other information has been validated, you can start investing over the limit of Rs. 50,000.

     

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    By |2019-08-08T08:31:10+00:00June 26th, 2019|mutual funds|0 Comments

    About the Author:

    This article has been posted by Pulkit Jain - the founder of WealthBucket - To raise awareness about Mutual Funds Investments. WealthBucket has made investing in Mutual Funds an easy, quick and welcome process, in India. An interactive online platform providing Trustworthy and sincere services to all its clients.