What is KYC in Mutual Funds? How Does it Work and How to Check the Status?

Know Your Customer or KYC for mutual fund services is much like that for any other financial service. What is KYC? It's a customer identification procedure compulsorily carried out by financial institutions like fund houses and banks.

KRAs or KYC Registration Agencies registered with the Securities and Exchange Board of India are responsible for maintaining KYC records. The RBI set up KYC guidelines back in 2002. The SEBI master circular published on Anti Money Laundering Standards stresses the need for this customer identification process.

How Does KYC Work for Mutual Fund Services?

According to the Prevention of Money Laundering Act, 2002, you must fulfil the procedure of KYC before putting your money in mutual funds. By providing your real name and other relevant details, you can prove your authenticity as an investor. With KYC compliance, you can also show that you don't have a history of defaults but have positive investment purposes. Then you can go ahead to invest in mutual funds and generate returns that you can estimate using an SIP calculator.

Who Requires KYC Compliance for Mutual Funds?

Anyone interested in investing in mutual funds must have KYC. You just need to undergo a one-time verification process for transactions related to all funds.

KYC compliance for mutual fund services applies for:

• Individual(s) or non-individual(s)
• A person who has legally turned into an investor, say, after the original investor's death
• A guardian who wishes to invest in a minor's behalf
• Constituted Power of Attorney (PoA) holder(s)

How to Check KYC Status?

You can see whether you have already undergone the KYC compliance procedure by putting your PAN details on a fund house's website or the KRA website. Plus you can check the last date of modification of the KYC status and whether to provide any missing details.

How to Carry Out the KYC Process?

If you already have KYC compliance, you don't need to go through the procedure again.

However, in case you aren't KYC compliant, you can carry out the process offline or online. To do it online, you can simply upload your identity and address proofs with your original photograph and your scanned signature. You can even go through the procedure with your physical presence. For that, you and any joint holder need to download the KYC form online from the mutual fund services website. Next, every applicant should fill up the form and submit it with authentic ID and address proofs. Make sure to appear in person for the physical verification of the documents.

After that, feel free to invest in a fund scheme and use the SIP calculator to automatically estimate the returns online.  

It's this easy to complete your KYC formalities to start investing in mutual funds. So, go for KYC compliance right away if you don't have it already. Then always ensure to keep the information in your KYC records updated. For modifying some information, remember to submit a KYC details change form along with the needful documents, such as a current residential address proof in case your address has changed.