Every financial service provider, including banks, top organizations, investment platforms, mutual fund companies, and insurance companies, conducts a background verification by KYC.
This is primarily done to stop cases of money laundering, fraud, and criminal activity.
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) require all Indian financial institutions to confirm the identity and address of every customer before allowing them to conduct any transactions. This process is called KYC, or ‘Know Your Customer.’
Today, e-KYC can be completed online, and mutual fund investing is possible because of security and technological advancements.
Using your Aadhar card as authentication, you can begin investing in mutual funds, just as you can create a bank account, activate a trading account, and activate your mobile connection.
What is KYC?
The “Know Your Customer” process is used to identify customers when opening an account with any financial company.
An investor’s identity and address are established through KYC using relevant supporting documents, including required photo identification (such as a PAN card), address verification, and In-Person Verification (IPV). KYC compliance is mandated by the Prevention of Money Laundering Act of 2002.
This KYC information is provided to the KYC Registration Agencies (KRA), who keep track of customer information and their KYC status.
Investors must complete the KYC process once with any KRAs registered with SEBI, including CVL, CAMS, KARVY, NSE, and NSDL.
Once completed, the investor can engage with any financial company and conduct transactions, as it is widely used for all intermediary banking transactions.
Why is KYC For Mutual Funds Necessary?
The KYC procedure was necessary to stop the development of fake investments and financial fraud in mutual fund industry.
KYC’s main goal is to ensure that real people use their original names to make deposits and investments. It also aids in reducing illegal currency.
This procedure recognizes you as a unique consumer using your ten-digit PAN (Permanent Account Number). Additionally, your original PAN card is used to verify your PAN.
Once your PAN has been validated, the financial firm can see if you have ever skipped a payment.
How to Check KYC Status for Mutual funds?
It’s quite easy to verify the progress of your application for KYC verification after you’ve submitted it.
- Investors must go to the CDSL.
- You will be asked to enter your PAN number.
- If the message states ‘MF-Verified by CVLMF,’ it indicates that the KYC has been completed and verified.
- The status will be ‘Pending’ if the KYC has not yet been verified.
What Documents Are Required for KYC
Investors must submit the following documents in addition to their Know Your Customer application form and a passport-sized photo.
1. ID Proof:
- PAN Card
- Driving License
- Passport Copy
- Voter ID
- Aadhaar Card
- Bank Passbook
2. Proof of Address:
- Recent Landline or Mobile Bill
- Electricity Bill
- Passport Copy
- Recent Demat Account Statement
- Latest Bank Passbook
- Ration Card
- Voter ID
- Rental Agreement
- Driving License
- Aadhaar Card
3. Passport copy
4. Passport Size Photograph
How to complete KYC?
Your mutual fund KYC can be completed online while you relax in your home. You only need to keep your documents ready for upload and follow the instructions below.
Step 1: Upload your PAN Card and Address Proof
Your PAN Card is your primary form of identification. Using your phone, take a photo of or scan your PAN card.
Check to see whether it is not tilted, cropped, or out of focus. If you don’t think the photo you just took is good enough, take another one and upload it.
For address verification, you may present your voter id, Aadhar card, driver’s license, or passport. You must upload both the front and back of these documents.
Select the image of the document you want to upload. Ensure that all the features are visible and that the image is not distorted or blurred.
When uploading photos for your mutual fund KYC, clarity is of the utmost priority. This is because these documents are legally mandated for you to manage your account.
Step 2: Upload Your Selfie
Using the smartphone’s front camera, take a selfie. Your face must be in perfect focus and should be in the middle of the frame.
Ensure your face is visible and that there is enough light.
Step 3: Upload Your Signature
Write your signature legibly on a blank sheet of white paper. Using a plain sheet of paper for your signature minimizes the chance of deformation.
After that, please take a picture of the signed document and crop it, so your signature is visible. You are free to attempt this as frequently as you like.
When you are satisfied with the outcome, upload the photo to the application.
Step 4: Upload Your Selfie Video
Start recording a video using your phone’s front camera. Ensure that your face is in sharp focus, in the middle of the screen, and with sufficient lighting. Then read out loud the numbers displayed on your screen.
The objective of this task is to verify the account holder’s identity. It contributes to the safety of your account.
Step 5: Complete the Aadhar-based E-sign Process
Your Aadhar Card’s associated mobile number will receive an OTP (One Time Password) once you have uploaded the necessary documents.
When you enter the OTP into the form, it is automatically emailed for review. This is your electronic signature based on Aadhar. Your account will be activated within 5-7 days.
You can now perform KYC online by following the steps mentioned above.
Benefits of Using Online KYC for Mutual Funds?
There are two prime benefits of performing the mutual fund KYC process online.
Rapid and Paperless:
Online forms can make the KYC process faster for mutual fund investments. You can provide the necessary information without having to visit a physical office. For the paperless online KYC process, you only need to upload the original documents that have been scanned.
Complete KYC Whenever and Wherever You Like:
The online KYC process can be finished anytime, anywhere, and requires no physical visits to any bank or financial institution branches.
To invest in a mutual fund, you must complete your KYC online. Through an easy, fully digitalized KYC process, you will be able to complete it through the use of your phone.
To verify your KYC, you must upload a scanned copy of your original documents after completing the online KYC form.
After your document verification is successful, you can begin investing in the mutual fund scheme of your preference.