AMFI is to reportedly come out with best practices circular whereby only investors who complete the KYC would be allowed to invest in mutual funds.
A CEO of the large fund house said that SEBI has asked AMFI to ensure that all investors in mutual funds are KYC compliant. He further said that SEBI observed that a few AMCs/RTAs have processed redemption requests without obtaining the PAN, which is not in line with regulations.
With this, investors will now have to get status of ‘KYC Verified’ to invest in mutual funds. Simply put, the practice of submitting KYC form along with the mutual fund application form will no longer continue. Distributors will now to have to ensure their clients are KYC compliant before submitting any application form for investment. Sources say that this would come into from March 1, 2020.
The existing mutual fund investors may also be given a timeline to comply with KYC norms at the earliest. They may not be allowed to continue their SIPs, make fresh investments or redeem their money if they do not get KYC verified status.
In September 2019, AMFI has clarified that PAN is mandatory for mutual funds redemption. With this, PAN exempt folio holders will have to compulsorily update their KYC details with PAN in order to redeem their investments from mutual funds.
