From now on PAN is mandatory for all mutual fund transactions including redemption.
In its latest communication, AMFI has clarified that PAN is mandatory for mutual funds redemption. With this, PAN exempt folio holders will have to update their KYC details with PAN to redeem their investments from mutual funds.
In 2012, SEBI allowed investors to invest up to Rs 50,000 annually in a single mutual fund per year without a permanent account number (PAN).
This has come after the recent SEBI inspection of mutual funds in which the market regulator observed that a few AMCs/RTAs have processed redemption requests in respect of non-PAN exempt folios without obtaining the PAN, which is not in line with various SEBI circulars.
AMFI said, “It is clear that PAN is required for redemption / repurchase transactions as well in respect of non-PAN-exempt folios, and AMCs/RTAs will be required to collect the PAN of the unitholder(s) at the time of redemption in such cases, if the same has not been provided previously. In short, the redemption transactions received without PAN in respect of non-PAN-exempt folios are liable to be rejected.”
AMFI has urged distributors to update PAN details of their clients immediately. “You are therefore advised to make sure that all your mutual fund clients have provided their PAN. If any of your mutual fund clients have not provided the PAN or have not completed the KYC process, please encourage them to fulfil the same urgently using the KYC form / 'KYC Change Request Form'. This will enable the RTAs to receive the PAN / KYC data from the KRAs and facilitate in the KYC / PAN updation by the RTAs across all mutual funds, without the client having to notify individual AMCs.”
Earlier, AMFI said that the mutual fund industry has 99 lakh folios without PAN as on May 31, 2019.
