The Securities and Exchanges of India (Sebi) has written to the Union ministry of finance for allowing acceptance of banks' Know Your Customer (KYC) checks for making investments in mutual funds (MFs).
The regulator has been in discussions on the issue with the Reserve Bank of India (RBI) and the government for some time. Sources in the MF sector say acceptance of banks' KYC for opening of fund accounts is likely to be accepted soon. Meaning, a bank account holder will be eligible to invest in any MF scheme on the strength of the bank passbook, doing away with the KYC red tape in opening an MF account. This would also reduce the costs for fund houses in doing a KYC of investors.
Currently, the MF sector has only 10 million distinct investors, not even two per cent of the 600-plus mn savings bank account holders. In the past two years, the number of bank accounts opened by way of the Pradhan Mantri Jan-Dhan Yojana has crossed 200 mn. MF investors have multiple accounts or folios --the total number of folios is a little more than 40 mn.
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