A long-awaited demand of the mutual fund industry that bank KYC should suffice for MF investments may come true soon.
A high level RBI committee on ‘Deepening of Digital Payments’ has pitched for simpler KYC norms in financial services industry that would help mutual funds industry grow. The committee has recommended RBI that there is no need to do multiple KYC for various financial investments; instead, bank KYC should be enough to invest in mutual funds and insurance.
The committee said, “In the short term, the committee recommends that for certain use cases, where the first transaction is from a verified KYC’ed account of the same user, a simple KYC process may be used. For instance, opening a mutual fund account by funding it from a KYC compliant bank account while restricting that the folio continues to be funded from and money refunded into that same account,” the report noted.
If the central bank’s recommendation becomes a reality, it would simplify customer onboarding by reducing the turnaround time to acquire a new client.
Talks of making bank KYC as a valid proof to invest in mutual funds have picked up pace in past 2-3 years. Reports had said that the launch of central KYC (CKYC) registry agency could eliminate the need to do fresh KYC for investing in mutual funds, if investors are already KYC compliant with either banks or capital markets. However, banks are yet to share KYC details on CKYC platform.
CKYC registry will link different identity proofs like PAN, Aadhaar and passport of an individual to help track all financial transactions.
