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Business News/ Mutual Funds / Mutual fund investors have a reason to cheer as the accounts won't get blocked on breaching March 31 deadline
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Mutual fund investors have a reason to cheer as the accounts won't get blocked on breaching March 31 deadline

Thanks to a written communication sent on March 28 by CDSL Ventures to mutual fund distributors, the mutual fund investors are not mandated to get the re-KYC done before March 31 in order to continue operating their folios

Mutual fund transactions such as SIP, SWP or STP will not get blocked as a result of the failure to re-do the KYC Premium
Mutual fund transactions such as SIP, SWP or STP will not get blocked as a result of the failure to re-do the KYC

When the deadline to get the fresh KYC (Know Your Customer) was only 72 hours away, the mandate to get a fresh KYC done in order to continue operating mutual fund folios was done away with, albeit for  the current investors.

This was done following a written communication sent by CDSL Ventures, one of the KYC registration agencies, on March 28, to mutual fund distributors, the investors are not mandated to get the re-KYC done by March 31 in order for them to continue transacting in mutual fund schemes. In fact, the failure to do it will now lead to their KYC being ‘put on hold’ instead of blocking of any transactions.

This means their transactions such as SIP (systematic investment plans), SWP (systematic withdrawal plans) and STP (systematic transfer plans) will not get blocked as a result of the failure to re-do the KYC.

Also Read: Seven key personal finance deadlines set to expire on March 31

Although the current mutual fund investors can heave a sigh of relief now, it does not offer any solace to the new investors.

“However, these investors would need to undergo fresh KYC as per the extant framework for getting on-boarded with any new intermediary," the email mentioned above states.

Notably, mutual fund distributors were earlier directed to ensure that investors whose KYC is not done using officially valid documents such as aadhaar and passport will not be permitted to use their accounts after March 31 unless they get the KYC re-done.

These directions had come from CAMS and KFin Technologies —mutual fund registrar and transfer agents or RTAs. But with this latest turn of events, investors do not need to worry – at least for the time being.

Let us understand the unfolding of mutual fund KYC episode in more detail here:

1. Firstly, two leading mutual fund registrar and transfer agents (also known as RTAs) CAMS and KFin Technologies informed mutual fund distributors that it is mandatory that investors get the KYC done again if the earlier one was not done using the valid documents.

2. The valid documents include aadhaar card, passport and Voter ID, among others unlike electricity bills or bank statements which were earlier accepted. 

3. The deadline to ensure that the KYC is done again with the new list of documents mentioned in (2) was March 31.

4. Failing to stick to the deadline meant that the investors would have lose access to their account. This means if they have an SIP or SWP or STP running, it would not go through in the subsequent months.

5. However, the latest communication sent on March 28 from CDSL Ventures to the mutual fund distributors states that the current investors’ accounts need not get blocked.

6. It is vital to note that the requirement of KYC with valid document still holds and someone who intends to join a new intermediary in the next fiscal is still expected to get the proper documentation done. 

7. All in all, the comfort is offered to the current mutual fund investors so that their folios are not blocked for the want of any document(s). 

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Published: 30 Mar 2024, 05:52 AM IST
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