Mutual fund investors, NRIs get a KYC breather from Sebi

  • NRIs given a breather of one year to complete KYC requirements and MF investors can get validated via either email or mobile verification rather than both.

Neil Borate, Sashind Ningthoukhongjam
First Published15 May 2024
Sebi has allowed MF investors to get validated through either email or mobile verification rather than both.
Sebi has allowed MF investors to get validated through either email or mobile verification rather than both.(Mint)

India's markets regulator has relaxed the Know Your Customer (KYC), or customer verification, requirements for mutual fund investors, including non-resident Indians (NRIs), following consumer feedback. 

Mint has seen a copy of a mail sent by the Securities and Exchange Board of India (Sebi) to industry participants. 

NRIs have been given a breather of one year for completing KYC requirements following representations from them about difficulty in passport validation. 

Similarly, Sebi has allowed mutual fund investors to get validated through either email or mobile verification rather than both. Non-verified investors have been allowed to redeem their investments, subject to due diligence by intermediaries.

Clear instructions from KYC Registration Agencies awaited

“We will have to wait for clear instructions from the KYC Registration Agencies (KRAs),” said Viral Bhatt, a mutual fund distributor and founder of Money Mantra.

Also Read: Sebi relaxes draconian KYC norms to simplify risk management framework

To be sure, mutual fund investors were required to verify their phone number and email with the KRAs failing which their KYC status would go ‘on hold’ from 1 April.

Investors also needed to update their KYC using Aadhaar cards as the proof document, if not done earlier, and get the ‘validated’ status to freely transact in new AMCs. Accounts that did KYC but used an officially valid document other than Aadhaar card were tagged as ‘verified’. 

This allowed them to sell their existing investments freely but had restrictions on buying schemes from new AMCs. They had to re-do KYC every time they wanted to invest in a new AMC or do a KYC again using Aadhaar and get the ‘validated’ tag.

Also Read: Sebi tells investment advisors to share details of all their social media handles every six months

NRIs had expressed their concern since most of them did not have an Aadhaar card and the process of completing the KYC again was cumbersome as it was not available online.

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