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Mismatch of name in PAN and MF Folios and non-verification of email id and mobile number of clients who have not used Aadhaar as officially verified document can disrupt MF transaction from April 1, 2024.
Let us look at the two issues one by one:
Name as per PAN card/Proof of Identity: Effective date April 01, 2024
The new KYC norms make it mandatory for fund houses to ensure that the name and date of birth (DOB) of an investor appearing on PAN or IT records and the mutual fund folios should match completely.
If there is a mismatch between the name/DOB appearing on PAN and MF folios, the RTAs will have to reject the transaction including SIPs and redemptions.
Individuals who use different names in PAN and MF folios will be affected by this norm. A Mumbai MFD told Cafemutual that many south Indians use different name in PAN and other documents like Aadhaar and MF folios. Also, many women investors who have not changed their PAN post marriage will also be affected.
The new norms also say that investors will have to mention their DOB or DOI (date of incorporate for non-individuals) based on PAN card only. In case of minor investor, guardian name and DOB will be mandatory, said CAMS.
The mismatch should be rectified in PAN first and then in MF folio by March 31, 2024.
Independent validation of KYC records for investors who have not used Aadhaar as proof of address: Effective April 1, 2024
According to the new KYC norms, the KYC registration agencies (KRAs) will have to validate KYC records of individuals who have not submitted Aadhaar as officially valid document.
Simply put, individuals who have used passport, driving licence, voter ID and other will fall under this verification process.
As part of this process, KRAs will verify email id and mobile number independently. If it isn’t validated, they will put KYC status to on hold and restrict such investors from carrying out financial and non-financial transaction in mutual funds.
Investors who have not used Aadhaar as officially verified document should register their valid email ID and mobile number in KYC record to avoid such a disruption. In other words, these investors will have to do KYC again to keep the KYC status alive.
SEBI also asked fund houses to periodically update all documents and information of clients under client due diligence (CDD) process.
