Securities and Exchange Board of India (SEBI), has rolled out a new set of rules for Indian Investors. These rules came into effect on 1st April 2024.
Rules stated that a Mutual fund investor with ‘on hold’ KYC status will not be able to carry out any monetary or positional transactions in his/her mutual fund account. These regulations are grounded by the fact that investors submitted non-Aadhaar and non-officially valid papers (OVDs) during the first KYC registration procedure.
Around 1.3 crores of mutual fund accounts are tagged as “on-hold” KYC status, according to KYC registration entities (KRAs).
Overview of investor’s KYC
Know Your Client (KYC) is an investing norm that ensures professionals can verify a client’s identity and consider their investment abilities and financial profile. According to a Times of India news report, about 7.9 crore or 73% of approximately 11 crore investors have valid KYC.
About 1.6 crore investors have KYCs and fall under the registered category; of these, 12% are unable to run their Mutual fund folios and demat accounts, also their access to investing is now restricted.
How to Access Your KYC Online
Investors can quickly and easily verify their KYC status online by doing the following:
Step 1: Visit the website run by KRA. For example, we have visited http://www.CVLKRA.com. An investor can also verify their KYC status through http://www.CAMSKRA.com.
Step 2: Select the “KYC Inquiry” option from the CVLKRA website.
Step 3: A new website will open. Then enter your PAN credentials. Afterwards, select the appropriate “Captcha” and click on “Submit”.
Based on the PAN credentials entered in the form, KYC status will be shown on the screen. There are prominently three types of KYC status namely verified, registered, or on hold.
Also Read: How is income from Mutual Funds taxed in 2024?
What is KYC Status and Its Meaning?
KYC Validated: Your documents like PAN or Aadhaar, are checked and approved by issuing authority. If there is no change, you can invest in mutual funds without redoing the whole KYC process.
KYC Registered/Verified: Your documents other than PAN or Aadhaar like passports or voter ID, can’t be independently verified or validated. Because these documents fall under officially valid documents (OVD). You can still invest in existing mutual funds. But for new mutual fund schemes, you need to submit documents again in future.
KYC on Hold: If you used any unofficial documents or your contact details aren’t confirmed, then your KYC is on hold. Until you provide required documents, you can’t do any financial or monetary transactions on your mutual fund account.
In this scenario, to transact in their current mutual fund schemes, investors will need to authenticate their email addresses and mobile numbers. Additionally, to avoid having to submit the same paperwork again when making new investments, investors should complete the re-KYC procedure (by providing PAN / Aadhaar).
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Disclaimer: The above content is for informational purposes only. Please consult a SEBI-registered investment advisor before making any investment decision.
