Mutual funds can now use Aadhar-based KYC to on board investors. The objective is to improve market access for the domestic retail investors, Finance Minister Nirmala Sitharaman said in a press conference today.
Industry experts see this announcement as a continuation of the government’s proposal in Union Budget 2019-20. The government had proposed to make PAN and Aadhaar interchangeable.
Ashutosh Bishnoi, MD & CEO, Mahindra Mutual Fund said, “While PAN has a concentrated existence, Aadhaar has a widespread presence with 120 crore Indians. Therefore, this move will certainly ease the KYC process and can be a huge boost for MF penetration.”
Jimmy Patel, MD & CEO, Quantum Mutual Fund shares a similar view and said, “Since the government has today allowed NBFCs to use the bank KYC (Aadhaar based KYC) to onboard new clients, a similar approach can be adopted in case of MFs.”
However, there is no clarity if today’s announcement has allowed mutual funds to onboard new clients through eKYC. A few industry officials said that they are awaiting clarity on Aadhaar based eKYC.
Earlier, an investor could invest up to Rs.50,000 per financial year per mutual fund using OTP based eKYC. Those who wished to invest more than this limit needed to undergo IPV or biometric based authentication at point of service of CAMS and AMCs. Through Aadhaar based eKYC, turnaround time and paper work used to be lesser than usual.
