From April 1, 2024, the Securities and Exchange Board of India (Sebi) has narrowed down the documentation accepted as Officially Valid Documents (OVD) for Know Your Client (KYC) process for mutual fund investments.
The documents that will be accepted as proof of identity (POI) or proof of address (POA) will include Aadhaar, passport, driving licence, voter ID card, NREGA job card, letter issued by the National Population Register containing details of name and address, or any other document authorised by the Union government in consultation with the regulator.
Previously accepted OVD proofs, such as bank statements or utility bills will no longer be considered as valid proofs for the KYC process. Sebi regulations state that investors must complete KYC formalities to invest in mutual fund schemes.
This process starts with filling out a designated KYC form and attaching valid POI and POA documents. These documents are then registered with one of the KYC Registration Agencies (KRAs) by fund houses or Sebi-registered entities, if not already available in the KRA records.
For Non-Resident Indians (NRIs) to open an accounts with Sebi-registered intermediaries or mutual funds, a passport copy or Persons of Indian Origin (PIO) card or Overseas Citizenship of India (OCI) card, and overseas address proof is mandatory.
For Re-KYC an online option for completing KYC is now available through Aadhaar-based e-KYC. Thus, one need not physically visit the fund houses, registrars, or distributors. This online process involves verifying investor credentials through a one-time password (OTP) sent to the mobile number linked with Aadhaar. Investors having a mobile device with necessary permissions enabled for camera, location, and microphone access can then do a video KYC followed by uploading a self-attested PAN copy and a signature image.
Investors who have previously completed KYC using bank statements or utility bills (KYC Registered) must undergo a fresh KYC process and submit physical documents to comply with the new regulations.
The KYC status in KRA records determines if investors can make transactions seamlessly with any other Sebi-registered intermediaries without production of KYC documents. If KRA can verify POI documents independently and the PAN-Aadhaar link, then that individual’s status is “KYC Validated”. In such a case, one can transact seamlessly without showing KYC documents again.
Otherwise, the individual’s status will be “KYC Registered”. In such instances, investor can transact with any other new Sebi-registered intermediaries by producing the KYC documents again, even if there is no change in KYC information already available.
It should also be noted that re-KYC has to be periodically updated with client information by the registered intermediaries as per Sebi norms. Investors must do re-KYC if they have not complied with the above-mentioned rules. Intermediaries are asked to facilitate re-KYC when the above-mentioned POIs or POAs are not used, and KYC status in KRA records are available as “KYC Registered”.
