A long-standing demand of the distributor fraternity, to make bank KYC valid identity proof to invest in mutual funds, is close to becoming a reality.
SEBI is likely to approach the ministry of finance requesting bank KYC and Aadhar be allowed as valid KYC and IPV to invest in mutual fund, said two people familiar with the goings-on.
In an hour-long meeting with the market regulator in Mumbai last month, MF CEOs requested SEBI Chief Ajay Tyagi to simplify customer onboarding by allowing bank KYC and Aadhar as a valid proof to invest in mutual funds, said two CEOs who attended the meeting.
“You need a PAN card, an address proof and a cancelled cheque to undergo KYC. One needs to submit PAN card and address proof to open a bank account. In addition, Aadhar card holders have already undergone In Person Verification (IPV). Ideally, we do not need to do KYC and IPV again. This is what we have requested SEBI,” said a CEO of a large fund house.
Currently, a new investor has to wait for at least a week after submitting the above documents to invest more than Rs50,000 in mutual funds.
Almost everyone who invests in mutual funds has a bank account. Allowing bank KYC and Aadhar as valid proof of KYC and IPV would make KYC procedure smoother and easier, which will eventually help reduce turnaround time to onboard a new client.
Though the government launched Central KYC last year to do away with the requirement of doing multiple KYC, it would take time to get operational. This new KYC captures additional details like mother’s name and FATCA particulars, which are for tax purposes of overseas investors.
