BackDone your KYC to invest in funds? Do it again in person
MF investors will now have to complete two additional formalities in their KYC process
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Come 30 November 2012 and you may not be able to invest in a mutual fund (MF) even if you have already adhered to know-your-client (KYC) norms.
That is because the capital market regulator, Securities and Exchange Board of India (Sebi), wants you to do your KYC again. However, all of you may not need to go through the process again.
As per the new KYC norms that came into force from January 2012, MF investors will now have to complete two additional formalities in their KYC process. Here’s what you would need to do.
Existing investors, existing fund houses
If you already invest in MFs and have done your KYC before (specifically in or before 2011), then you are already said to be KYC-compliant. If you continue to invest in the same MFs where you have been investing in so far, then you don’t need to do anything. Life goes on as usual.
Existing investors, new fund houses
If you have invested in five fund houses and now want to invest in two more, where you have never invested before, you would need to comply with two additional requirements. Get your in-person verification (IPV) and fill up a new form called “KYC Details Change Form".
New form: It is an addition to your existing KYC details already submitted. This form will merely update your existing KYC details. Additionally, you need to provide your income and networth details.
What is IPV? IPV is a new requirement whereby your fund house will verify your physical presence. In other words, just a picture of you on some MF application form or KYC form won’t do. You now need to actually verify that you are alive by being physically present before your MF.
Either a KYC registration agency (KRA), MF distributor, MF’s registrar and transfer agent such as Computer Age Management Services (Cams) and Karvy Computershare Pvt. Ltd or the fund house can carry out your IPV. Just make sure that you personally visit any of these firms with your documents and photographs.
Once your IPV is done, your KYC modification is complete. You’re now set to invest in new fund houses where you have never invested before.
Uniform KYC: Once you do your new KYC, including IPV, your records are uploaded on a central KYC system that is then accessed by all the four KRAs. At present, there are four KRAs, three of which came up earlier this year. The main purpose of these KRAs is to help you get KYC done in case you need to invest in any stock market intermediaries such as MFs, direct equities through a stock brokerage, portfolio management services and so on. More KRAs mean more offices and outlets, spread across the country, where you can go and get your KYC done.
This means that once you do your IPV and KYC, it will work for all your other future stock market investments as well.
Alternatively, if you do a fresh KYC, complete with IPV, with any other stock market intermediary like stock broker or portfolio management services firm, the same KYC will work for your MF investments as well.
New investors
This one’s very simple. You simply have to fill out the new KYC form and get your KYC done. Submit the form with proof of address and proof of identity. The proof of identity that you will submit must carry your picture. You will also need an additional picture for your KYC application form. The IPV is already a part of the KYC process.
How to check your KYC?
To know whether you are adhered to the first phase of KYC norms (done before January 2012) or the second phase (which includes IPV), visit the website of CDSL Ventures Ltd at www.cvlkra.com, one of the four KRAs in service as of today. If your KYC status says MF verified by CVLMF this means that you have adhered to the earlier KYC norms (minus IPV). This website also contains the KYC forms, including the form you need to fill if you have already done KYC before January 2012.
What should you do?
As irritating as it sounds to comply with KYC requirement on more than one occasion, we suggest you get your IPV done. Check if your agent is qualified to do your IPV. Only some agents can do IPVs. They can even visit your home or office and do your IPV. “It is in the interest of every investor to get their IPV done, even though it impacts only those who wish to make fresh or first-time investments in MFs. This is because it just opens up new avenues," says Rajiv Anand, CEO, Axis Asset Management Co. Ltd.
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