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The new validation process of all mutual fund accounts under SEBI’s customer due diligence norms has posed a lot of challenges to MFDs.
We spoke to a few MFDs to understand their problems and how they are resolving this issue. Let us look at what they have to say:
Pradip Jain, PMPK Wealth, Ranchi
Pradip shared with us how he and his team took this challenge as an opportunity to interact with their clients. He said, “There are both positive and negative aspects to such regulations. MFDs should try to focus on the positives. We saw this as an opportunity to interact with our clients and understand their financial needs.”
Action taken:
- Communicated the new norms to clients through WhatsApp and Email
- Created a separate team to help clients with KYC ‘registered’ and ‘on hold’ status
- Prioritized clients with existing SIPs to avoid bounce
- Worked on holidays
Rajesh Kulwal, Duoak Finserv, Indore
Expressing his unhappiness from the disruption in transactions, Rajesh said, “It is very difficult to tackle clients who want to know why their KYC status has suddenly gone ‘On Hold’. People with urgent liquidity needs are facing the most issues as they are unable to execute their transactions. On top of it, a lot of people do not know how to do create XML Aadhaar.”
Action taken:
- Worked on holidays
- Set a target to complete at least 10 KYCs everyday
- Adviced elderly clients not to panic
Ritesh Sheth, My Fund Guide, Mumbai
Ritesh is not happy with the push towards Aadhaar based KYC . He said, “As MFDs have no access to the SEBI database, there is no clarity. There has been no official circular that specifically makes registration of Aadhaar compulsory. I feel that making it compulsory is wrong. Also, it is difficult to convince people to share their Aadhaar with a private entity.”
Ritesh also discussed the challenges faced by NRIs. He said, “NRIs who are not present in India are unable to invest in a new AMC. There is a lack of standard procedure to update KYC. In some cases, email IDs and phone numbers are too old which is why clients have lost access to them. Due to this, they are unable to verify them.” Ritesh and his team were required to complete KYC validation of around 900 clients.
Action taken:
- No new customer acquisitions. Priority is to help existing clients fix KYC issue
- Target to complete 15-20 KYCs everyday
- Did sessions for NRIs on what need to be done
Sukanta Bhattacharjee, Asansol
Sukanta shared with us the challenges faced by him due to the new regulations. He said, “I have been working in this industry since 2002. As there was no need for Aadhaar during those days, KRAs have put majority of my clients KYCs on hold. As a result, majority of SIPs did not go through.”
Action taken:
- Prioritized KYC validation over regular sales
- Prioritized existing SIPs to make sure they are not closed due to KYC issue
- Interacted personally with clients to make them comfortable to share Aadhaar details
