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The new KYC norms has made it difficult for MFDs depending on physical copies or scanned copies to do KYC.
According to the new KYC norms, KYC Registration Agencies (KRAs) have stopped accepting scanned copy of KYC documents. Further, the KYC application form has to duly signed with the wet signature of the applicant.
Also, most KRAs have stopped accepting bank passbook as a valid proof of address. In addition, investors who wish to submit Aadhaar as a valid proof of address will have to submit e Aadhaar or Aadhaar XML or virtual ID (VID), which requires them to follow a due process to download. Further, the downloaded Aadhaar must have QR code in it which can be scanned by KRAs.
Mumbai MFD Sadashiv Phene believes that the new KYC norms have made it difficult for many investors to invest in mutual funds. “Many women don’t have passport and driving license. Here Aadhaar is the only option. Since investors have to follow a due process to download eAadhaar, they procrastinate their investment decision or decide not to pursue mutual funds for investments.”
Another Mumbai MFD Ritesh Sheth told Cafemutual that he does not encourage investors to submit eAadhaar for physical KYC. “Since obtaining e Aadhaar is a tedious process, I don’t prefer taking it. Even if you obtain e Aadhaar, the next step is to ensure that QR is in good condition and can be scanned by the KRA systems for authentication. If a client does not have anything other than Aadhaar, I do their KYC online which is simple and it takes a few minutes to authenticate their KYC details.”
Let us look at some other changes to the KYC norms
- Email id should be mentioned in capital letters
- Putting mobile number has become compulsory
- New gender – transgender (T) has been added to the form
- Email id, mobile number, PAN and Aadhaar (if provided) has to be authenticated before verifying the KYC
- For digital KYC, investors will have to submit PDF file of KYC along with their digital signature
- e-Signature should be matched with applicant’s name with threshold of at least 90%
