New investors will now have to make some investment in the form of SIP or STP or lump sum from January 1, 2012.
Mumbai: New mutual fund investors can’t open zero balance folios from January 1, 2012. Zero balance folio is an account which has no investment in it. Alongwith KYC, new investors will now have to make some investment in the form of SIP or STP or lump sum.
“New KYC form can be submitted by an investor alongwith an investment application: purchase / additional purchase / switch / SIP mandate form / STP mandate form, and not on a standalone basis, as was possible prior to 31/12/2011. However, an investor who has investments in any mutual fund and is not KYC compliant may submitnew uniform KYC form to the mutual fund by quoting the folios number,” states an AMFI circular shared with the industry yesterday.
The new KYC norms have been introduced to eliminate duplication of KYC process. Cafemutual had first reported that CVL was appointed as KYC Registration Agency by SEBI. (Read here)
AMCs allowed zero balance folios in order to attract more investors into mutual funds. This facility was provided as value added service to investors. This facility helps investors park their money in a scheme at a later date.
Existing and new mutual fund investors who are KYC compliant as per the old practice can continue to use the KYC acknowledgment for mutual fund investments. However, it will not be applicable for investments with other intermediaries in the securities market.That means existing KYC compliant mutual fund investors have to again undergo KYC as per the new norms in order to invest in the securities market.
