The know you customer (KYC) documentation has been a deterrent to mutual fund (MF) investing, but in the past one year, fund houses have made progress as the capital market regulator, Securities and Exchange Board of India (Sebi), has eased the on-boarding process. The aim is to help reduce the paperwork and ensure that you don’t need to wait long for your KYC to be processed before investing.
This is being done by harnessing two tools: Aadhaar (where all your necessary details are already captured) and Internet (so that the process can be followed from your home or office). To this effect, there have been two innovations. Last year, e-KYC was launched. Last week, ICICI Prudential Asset Management Co. Ltd became the first fund house to launch a completely paperless, biometric KYC.
HOW DOES IT WORK
You need to visit the fund house’s branch. At present, seven branches offer this service. These are in Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Pune and Hyderabad. You also need to have Aadhaar and Permanent Account Number (PAN). These branches will have a small devise on which you have to give your thumb’s impression. The system then gets in touch with the Unique Identification Authority of India (UIDAI; the keeper of Aadhaar records) and validates your data. The process takes a few minutes. No paperwork or additional signatures are needed.
Biometric KYC automatically takes care of the need for in-person verification (IPV) as well. This is a key requirement of KYC, where the fund house (either directly or through a distributor) confirms your presence to ascertain that you, the investor, is truly alive.
DIFFERENCE BETWEEN BIOMETRIC AND E-KYC
Both biometric KYC and e-KYC are Aadhaar based. While in the former, you need to physically go to the fund house’s branch, e-KYC can be done from your home or office. Soon, fund houses will enable biometric KYC for distributors as well.
In e-KYC, as per Sebi’s guidelines issued in January 2016, you need to log in to your fund house’s website, enter Aadhaar and PAN, and enter the one-time password (OTP) that UIDAI sends to the mobile phone registered with it, that you would have registered with your Aadhaar records. This process, too, takes a few minutes.
However, in this method, if you wish to do away with the IPV process, you can invest only up to Rs.50,000 a year per fund house. If you want to invest more, IPV is mandatory. One way to quicken your investments is to get the e-KYC done, make the initial investment and then later do the IPV to be able to invest additional amounts.
WHAT NEXT?
