 "mutual fund")
Recent changes to the Know Your Customer (KYC) regulations, which became effective on April 1, have led to the temporary suspension of numerous mutual fund accounts. According to The Economic Times, this issue affects over 13 million accounts where KYC updates are incomplete.
Reason: Individuals have provided non-Aadhaar and non-officially valid documents (OVDs) during the initial KYC registration process. The Securities and Exchange Board of India (Sebi) notified months ago that from April 1, investors with an 'on hold' KYC status will not be able to carry out any transactions in mutual funds. This includes investing in new mutual funds or redeeming units from existing mutual funds.
Documents NOT valid for KYC compliance: As Business Standard reported earlier, documents such as utility bills (electricity, telephone), bank account statements, etc., are no longer accepted as valid documents for KYC compliance by Sebi. Also, it is mandatory that your KYC is updated with PAN and Aadhaar and that the two are linked.
In fact, the need to reclassify KYCs under various categories arose after it was found that KYCs didn't have the above.
According to TOI, “Of nearly 110 million investors, about 79 million or 73% have valid KYC. KYCs of about 16 million investors are under the registered category, who now have limited access to investing, while 12% of the total can’t operate their demat accounts and MF folios.
How to verify your KYC status online
Investors can verify their KYC status online by following these steps:
Step 1: Visit a KRA website. For instance, navigate to www.CVLKRA.com or you could visit www.CAMSKRA.com as an alternative.
Step 2: On the homepage of the CVLKRA website, select “KYC Inquiry”.
Step 3: You will be redirected to a new page. Here, input your PAN, solve the captcha, and then press “Submit”.
After submission, your KYC status will appear on the screen based on the PAN details you entered. The KYC status may show as validated, registered, or on hold.
KYC status categories
KYC validated: If your KYC status is validated, it means your PAN and Aadhaar have been confirmed by the issuing authority. You can invest in any mutual fund without repeating the KYC process.
KYC registered/verified: This status is given when your documents cannot be directly verified by the issuing authority and do not include PAN or Aadhaar. Although existing investments remain unaffected, new investments require resubmission of KYC documents.
KYC on hold: This status means your submitted documents weren't officially valid or your contact details were not verified. Restricted from making transactions, you must verify your contact details or submit valid documents like PAN or Aadhaar to resolve this.
PAN-MF folio mismatch: What has changed
Previously, the details such as your name and date of birth were cross-checked against PAN records by the Registrar and Transfer Agent (RTA) using a detailed matching system that allowed for minor discrepancies in name spelling.
For instance, variations like "S K Gill" on a mutual fund application being matched to "Sunil Kumar Gill" on a PAN card were acceptable.
However, under the new system, the PAN agencies no longer provide detailed name matches to the RTAs. Instead, they only issue a 'Yes' or 'No' response indicating whether the name on your mutual fund folio exactly matches the name on your income tax records.
This means even minor discrepancies between the names in the records could lead to the suspension of transactions.
Correct any discrepancies to avoid issues with your investments. This verification is also required for all account holders, including guardians and those holding power of attorney.
