The domestic mutual fund sector is being saddled with a new cost burden due to the implementation of the new centralised know-your-customer (C-KYC) norms.
According to industry players, moving one customer to the new C-KYC system costs the fund house up to Rs 40. Given the past pace of new client addition along with the movement of existing clients to the new system, the aggregate cost is likely to go through the roof, they say.
The new system is aimed having a common KYC process for all financial sector intermediaries, which include mutual funds, banks, insurance companies and brokers.
Despite being bank or insurance customers, most new mutual fund clients aren't part of the C-KYC system and fund houses end up empanelling them, say industry players.
