SEBI simplifies KYC norms for mutual fund investors
The Securities and Exchange Board of India (SEBI) has eased the Know Your Customer (KYC) norms to streamline the risk management framework. This revision, effective from April 1, was implemented following feedback from stakeholders in the securities market. The aim is to facilitate smoother transactions for clients. "The provisions of the Master Circular dated October 12, 2023 have been reviewed and it has been decided to simplify the risk management framework," SEBI stated in an official release.
New KYC verification process for mutual fund investors
In October, SEBI mandated all investors to update their KYC process by submitting necessary documents such as Aadhaar, passport, or a voter ID card. Previously, a bank passbook or account statement was accepted as valid proof of address for KYC. Under the revised norms, KYC Registration Agencies (KRAs) are now required to verify the PAN, name, and address of all clients within two days of receiving the KYC records.
SEBI clarifies validated records for KYC verification
SEBI has further clarified the criteria for validated records in the KYC process. "The records of those clients in respect of which all attributes are verified by KRAs with official databases" and PAN-Aadhaar linkage has also "been verified as referred to in Rule 114 AAA of the Income Tax Rules, 1962 shall be considered as Validated Records," stated SEBI.
SEBI instructs necessary technical changes by May 2024
SEBI has instructed exchanges, depositories, and intermediaries to implement necessary technical changes in their systems by May 31, 2024. This is to ensure compliance with the revised KYC norms. Investors are advised to check their KYC status before investing. If an investor's status is 'KYC validated,' they can transact in any mutual fund at any time. However, if the status is 'KYC on hold/rejected,' they should upload valid documents on the mutual fund website.
