Failing to submit KYC documents can restrict your mutual fund transactions.
As March 31 marks the end of the financial year, businesses and individuals alike are preparing for changes that come into effect on April 1. With the dawn of the new fiscal year, several adjustments and expectations are on the horizon. An important change will come in force for mutual fund investors as they have to get their know your customer (KYC) done again. Registrar and transfer agents (RTAs), Computer Age Management Services or CAMS and KFin Technologies (KFintech) have been sending emails to mutual fund distributors (MFDs), stressing the need for action.
What do the investors have to do?
According to the guidelines, mutual fund investors whose KYC is not based on the officially valid documents have to mandatorily get it done by March 31.
The valid documents, according to the emails, are Aadhaar card, passport and voter ID card. KYC done based on proofs such as bank statements and utility bills will no longer hold valid after this deadline.
What will happen if investors miss the deadline?
People who fail to submit official documents for redoing the KYC won't be able to make any mutual fund transactions from April 1, 2024.
These transactions include systematic investment plans (SIPs), systematic withdrawal plans (SWPs) or redemptions.
Those who take the services of a mutual fund distributor (MFD) will be informed about the deadline through email and other communications. But people who invest on their own may not necessarily receive intimation.
How to do the mutual fund KYC again?
The investors need to contact Central Depository Services Limited (CDSL) Ventures Limited, a Know Your Customer (KYC) registration agency authorized by SEBI.
It is important to note that the process cannot be done online. To register the (proper) KYC again, investors need to submit a physical KYC form along with the documents to mutual fund houses or RTAs.
Why this needs to be done?
Some investment services said that re-KYC is being done to ensure compliance with a SEBI circular dated October 12, 2023 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005.